A Framework for studying Monetary Non-Neutrality
This paper sets forth a simple general structural model of aggregate output, the interest rate, and the price level. The core of the model is the determination of the level of output as a product-market equilibrium, either competitive or oligopolistic, possible indeterminate because of thick-market externalities. Monetary non-neutrality can affect either product demand or product supply. In either case, monetary policy has leverage over output as well as the price level. The paper develops a two-diagram analysis intended to replace the aggregate demand-aggregate supply diagram.
|Date of creation:||Oct 1989|
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- Ramey, Valerie A. & West, Kenneth D., 1999.
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- Brunner, Karl & Meltzer, Allan H., 1986. "Real business cycles, real exchange rates, and actual policies," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 25(1), pages 1-10, January.
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