Optimal monetary policy and the equivalency between the one-period AD-AS model and the forward-looking New Keynesian model
It is shown how a one-period aggregate demand-aggregate supply (AD-AS) model yields equivalent expressions for inflation and output under optimal monetary policy as a forward-looking New Keynesian model. Furthermore the advantage that the AD-AS model has over the New Keynesian specification when evaluating policy efficiency is evaluated.
Volume (Year): 13 (2006)
Issue (Month): 9 ()
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"The Science of Monetary Policy: A New Keynesian Perspective,"
NBER Working Papers
7147, National Bureau of Economic Research, Inc.
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