Effect of Monetary Intervention in the Frame of IS-LM Model with Dynamic Price Adjustment and Adaptive Expectations
An assumption that a central bank can influence the real interest rates is the object of our interest. In the paper we form and solve a model which corresponds to Romer´s (2000) assumptions. Our model is IS-LM augmented by a conception of price-adjusting after monetary intervention and inflation expectations. A monetary policy rule is derived from the model. Moreover, it offers a demonstration of economic behaviour by different economic assumptions of different economic schools, similar to one in the book of Heijdra (2002).
Volume (Year): 2011 (2011)
Issue (Month): 1 ()
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- Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
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- Hsing, Yu, 2005. "Application of the IS-MP-IA Model to the Slovene Economy and Policy Implications," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 58(2), pages 167-177.
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