The efficiency of macroeconomic policies depends on adequate business cycle approximation. Given that potential output and the output gap (the difference between actual and potential output) are not directly observable, their values need to be estimated using alternative statistical, structural,...

An assumption that a central bank can influence the real interest rates is the object of our interest. In the paper we form and solve a model which corresponds to Romer´s (2000) assumptions. Our model is IS-LM augmented by a conception of price-adjusting after monetary intervention and...