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Une note sur la règle du taux d’intérêt et le rôle de la courbe LM
[A note on the interest rate rule and the role of LM curve]

Author

Listed:
  • Dai, Meixing

Abstract

This note takes part in the debate on the topic “a macroeconomics without LM”. It shows that, when the central bank does not control directly the interest rates on the money and financial markets, LM curve has another role to play than to determine in an endogenous way the money supply when the monetary policy is specified in terms of interest rate rule. In effect, flexible price LM curve makes it possible to specify the expected inflation rate dynamics within an analytical framework generally adopted by the economists defending the idea of abandoning LM in the teaching of the macroeconomics in first cycle.

Suggested Citation

  • Dai, Meixing, 2003. "Une note sur la règle du taux d’intérêt et le rôle de la courbe LM
    [A note on the interest rate rule and the role of LM curve]
    ," MPRA Paper 13779, University Library of Munich, Germany, revised Mar 2009.
  • Handle: RePEc:pra:mprapa:13779
    as

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    File URL: https://mpra.ub.uni-muenchen.de/13779/1/MPRA_paper_13779.pdf
    File Function: original version
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    References listed on IDEAS

    as
    1. Robert J. Gordon, 1997. "The Time-Varying NAIRU and Its Implications for Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 11-32, Winter.
    2. Dai, Meixing & Sidiropoulos, Moïse, 2002. "Règle du taux d'intérêt optimale, prix des actions et taux d'inflation anticipé : une étude de la stabilité macroéconomique
      [Optimal interest rate rule, asset prices and expected inflation rate : a
      ," MPRA Paper 14401, University Library of Munich, Germany, revised Jun 2003.
    3. Benjamin Friedman, 2003. "The LM Curve: A Not-So-Fond Farewell," NBER Working Papers 10123, National Bureau of Economic Research, Inc.
    4. David H. Romer, 2000. "Keynesian Macroeconomics without the LM Curve," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 149-169, Spring.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Interest rate rule; flexible price LM curve; monetary policy; expected inflation rate dynamics; macroeconomic stability;

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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