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Equality of Demand and Supply Neither Determines Price Nor Clears the Market
Gani, Mohammad - EconWPA - 2004
) monetary theory, which claims that equality of demand and supply is necessary but not sufficient to clear the market. In … indirect trade, money also must be used. Micro says that price is equal to marginal cost, rejecting trade theory’s claim that … trade is gainful. To remove these and other contradictions, price theory must be repaired. Money’s role in market clearing …
Persistent link: https://www.econbiz.de/10005413280
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Liquidity Preference Theory Revisited—To Ditch or to Build on It?
Bibow, Joerg - EconWPA - 2005
This paper revisits Keynes’s liquidity preference theory as it evolved from the Treatise on Money to The General Theory … and after, with a view of assessing the theory’s ongoing relevance and applicability to issues of both monetary theory and … policy. Contrary to the neoclassical “special case” interpretation, Keynes considered his liquidity preference theory of …
Persistent link: https://www.econbiz.de/10005126066
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A calibrated structural model of the Czech economy
Hlédik, Tibor - EconWPA - 2004
The paper presents a structural model framework for a small open economy. The model, based on optimising households and firms, has been calibrated on Czech macroeconomic data in order to develop an analytic framework suitable for analysing key policy questions related to the Czech Republic’s...
Persistent link: https://www.econbiz.de/10005076689
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The Cause of the Great Inflation: Interactions between the Government and the Monetary Policymakers
Harashima, Taiji - EconWPA - 2005
The paper offers a new explanation for the cause of the Great Inflation by constructing a model that explicitly separates the roles of government and monetary policymakers. A mechanism that inflation can accelerate even if an inflation target is low is uncovered. The model solves the puzzle of...
Persistent link: https://www.econbiz.de/10005124998
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The role of expectations in the inflation process in the euro area
Paloviita, Maritta; Virén, Matti - EconWPA - 2005
This paper analyses the role of inflation expectations in the euro area. On one hand, the question is how inflation expectations affect both inflation and output, and, on the other hand, how inflation expectations reflect developments in these variables. The analyses make use of a simple VAR...
Persistent link: https://www.econbiz.de/10005126316
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Friedman’s money supply rule vs optimal interest rate policy
Evans, George W.; Honkapohja, Seppo - EconWPA - 2004
Using New Keynesian models, we compare Friedman’s k-percent money supply rule to optimal interest rate setting, with respect to determinacy, stability under learning and optimality. We first review the recent literature. Open-loop interest rate rules are subject to indeterminacy and...
Persistent link: https://www.econbiz.de/10005126422
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Macroeconomic Policy in a Real Business Cycle Model with Money
Chen, Shiu-Sheng - EconWPA - 2002
This paper examines the impact of macroeconomic policy shocks in a Real- Business-Cycle Model with money. In addition to technology shocks, I include government consumption, government investment, tax rate and monetary policy as sources of random disturbances. Money is introduced in a...
Persistent link: https://www.econbiz.de/10005126437
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How Does Global Disinflation Drag Inflation in Small Open Economies?
Vega, Marco; Winkelried, Diego - EconWPA - 2004
This paper shows the way how persistent world inflation shocks hitting a small open economy can re-weight the importance of domestic and foreign factors in the determination of prices. In this sense, we study why the recently observed global disinflation environment may imply a weakening of the...
Persistent link: https://www.econbiz.de/10005412737
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Inflation Targeting: A Critical Appraisal
Arestis, Philip; Sawyer, Malcolm - EconWPA - 2003
Since the early 1990s, a number of countries have adopted Inflation Targeting (IT) in an effort to reduce inflation. Most literature has praised IT as a superior framework of monetary policy. We suggest that IT is a major policy prescription closely associated with the New Consensus...
Persistent link: https://www.econbiz.de/10005561314
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A Simple Model of Keynesian Unemployment
Nakajima, Tetsuya - EconWPA - 2005
Constructing a general equilibrium model which compactly incorporates the markets for outputs, labor, money, and equities, we examine equilibrium unemployment. While a mechanism of an efficiency wage brings about nominal wage rigidity, unemployment occurring in our model definitely has Keynesian...
Persistent link: https://www.econbiz.de/10005076693