Capacity Utilization, Inflation, and Monetary Policy: The DumÃ©nil and LÃ©vy Macro Model and the New Keynesian Consensus
The article considers the adjustment toward long-run equilibrium within the DumÃ©nil and LÃ©vy macro model, with modifications. Findings show that long-run convergence to fully adjusted positions with normal utilization is not achieved when a more realistic reaction function is proposed. Classical equilibrium occurs when a vertical Phillips curve is substituted, but the model is isomorphic to the â€œnew consensusâ€ model and to features of â€œnewâ€ endogenous growth theory. JEL classification: E12, E40, E52, E58
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