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An Improved IS-LM Model To Explain Quantitative Easing

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  • Hiermeyer, Martin

Abstract

The paper combines the IS-LM model with a Tobin-style ‎analysis of the banking system. As suggested by Krugman, the resulting model has great predictive power. It can explain quantitative easing and its effect on the economy, helicopter money and money creation by banks. Also, it is free of the normal shortcomings of the IS-LM model.

Suggested Citation

  • Hiermeyer, Martin, 2019. "An Improved IS-LM Model To Explain Quantitative Easing," MPRA Paper 92394, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92394
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    File URL: https://mpra.ub.uni-muenchen.de/92394/1/MPRA_paper_92394.pdf
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    References listed on IDEAS

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    1. Carlin Wendy & Soskice David, 2005. "The 3-Equation New Keynesian Model --- A Graphical Exposition," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-38, December.
    2. Bernanke, Ben S & Blinder, Alan S, 1988. "Credit, Money, and Aggregate Demand," American Economic Review, American Economic Association, vol. 78(2), pages 435-439, May.
    3. Carl E. Walsh, 2002. "Teaching Inflation Targeting: An Analysis for Intermediate Macro," The Journal of Economic Education, Taylor & Francis Journals, vol. 33(4), pages 333-346, December.
    4. Peter Bofinger & Eric Mayer & Timo Wollmershäuser, 2006. "The BMW Model: A New Framework for Teaching Monetary Economics," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(1), pages 98-117, January.
    5. Allsop, Christopher & Vines, David, 2000. "The Assessment: Macroeconomic Policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 16(4), pages 1-32, Winter.
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    Cited by:

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    More about this item

    Keywords

    Monetary Policy; Money Supply;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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