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A Simulation Approach to the Taylor-Romer Model of Macroeconomic Stabilisation Policy


  • Ross Guest

    () (Griffith University, Queensland, Australia)


This paper shows how spreadsheet simulations can be used to teach the Taylor-Romer model of macroeconomic stabilisation policy. This model is both a simpler and more realistic description of the modern implementation of monetary policy than the traditional IS-LM-AS model. The simulation exercises are quite appropriate at the introductory (or principles) level. One modification is proposed to the model; that is, the replacement of the level of output by the growth rate of output. This allows for a direct illustration of the short run trade-off between growth and inflation in the model.

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  • Ross Guest, 2002. "A Simulation Approach to the Taylor-Romer Model of Macroeconomic Stabilisation Policy," Computers in Higher Education Economics Review, Economics Network, University of Bristol, vol. 15(1), pages 4-7.
  • Handle: RePEc:che:chepap:v:15:y:2002:i:1:p:4-7

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    1. A. M. Ulph & G. M. Folie, 1980. "Exhaustible Resources and Cartels: An Intertemporal Nash-Cournot Model," Canadian Journal of Economics, Canadian Economics Association, vol. 13(4), pages 645-658, November.
    2. Ferris, Michael C. & Munson, Todd S., 2000. "Complementarity problems in GAMS and the PATH solver," Journal of Economic Dynamics and Control, Elsevier, vol. 24(2), pages 165-188, February.
    3. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    4. Newbery, David M G, 1981. "Oil Prices, Cartels, and the Problem of Dynamic Inconsistency," Economic Journal, Royal Economic Society, vol. 91(363), pages 617-646, September.
    5. Salant, Stephen W, 1976. "Exhaustible Resources and Industrial Structure: A Nash-Cournot Approach to the World Oil Market," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1079-1093, October.
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