IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Macroeconomic Market Incentive Plans: History and Theoretical Rationale

Listed author(s):
  • Kenneth Koford
  • Jeffrey B. Miller

This paper explores the contemporary debate among economists on the means to move the economy toward high employment without inflation-beyond the traditional instruments of monetary and fiscal policy. The authors pay particular attention to the Market Anti-Inflation Plan (MAP), submitted by Lerner and Colander in 1980. The reasons economists have searched for alternative measures relate to the problems associated with wage and price controls. MAP is an anti-inflation plan that allows relative prices to adjust: The scheme increases costs to firms that raise prices, and contains an added incentive to lower prices. Since MAP is designed to fight macroeconomic inflation by changing the incentives of individual price setters, the relationship between microeconomic behavior and macroeconomic outcomes must be addressed. The theoretical justification for MAP is that there is a macroeconomic externality, and MAP can mitigate the ramifications of the externality. However, efforts to more clearly define the nature of this externality require a better understanding of transaction costs. Consequently, there will be the need for a mechanism to integrate such costs into microeconomic and macroeconomic models.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_71.

in new window

Date of creation: Jan 1992
Handle: RePEc:lev:wrkpap:wp_71
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_71. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie-Celeste Edwards)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.