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

An inquiry into the multiplier process in IS-LM model

Listed author(s):
  • Li ziran

    (Pking University)

  • Li weiye

    (Pking University)

Registered author(s):

    The multiplier theory is still an important analytical tool in many macroeconomic textbooks. For example, a number of textbook authors use the theory to explain the process of growth in goods market by expanding the multiplier process into a geometric series, and thus obtain the route of economic growth. Then some students raise an interesting question: Can we induce the dynamics of the monetary and fiscal transmission mechanism of IS-LM model through the multiplier process? (None of the textbooks involve this problem; alternative solutions are available in economics journals, but go beyond the scope of our students¡¯ knowledge.) If not, what is the problem in the analysis of the multiplier process? Here I first show some professor¡¯s deduction of the "monetary transmission mechanism", and then analyze the main problems and discuss the multiplier theory. Finally, I propose a generalization of the monetary transmission mechanism approach. I trace the change of demand and output in the process of increase respectively, and use a stochastic series of variables to reflect regularity in the their relationship, and obtain another two curves in IS-LM model representing their relationship In conclusion, I demonstrate theoretically that the economy will ultimately reach its equilibrium point, following the route of LM curve between one static equilibrium point to another.

    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

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    Paper provided by EconWPA in its series GE, Growth, Math methods with number 0111003.

    in new window

    Date of creation: 25 Nov 2001
    Handle: RePEc:wpa:wuwpge:0111003
    Note: Type of Document - MS word; prepared on IBM PC - PC-TEX/;
    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:wpa:wuwpge:0111003. 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: (EconWPA)

    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.