A Simulation Approach to the Taylor-Romer Model of Macroeconomic Stabilisation Policy
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.
Volume (Year): 15 (2002)
Issue (Month): 1 ()
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