The New IS-LM Model: Language, Logic, and Limits - Economic Quarterly Summer 2000
Article
The New IS-LM Model: Language, Logic, and Limits
The New IS-LM Model: Language, Logic, and Limits - Economic Quarterly Summer 2000
The New IS-LM Model: Language, Logic, and Limits - Economic Quarterly Summer 2000
Summer
2000
The New IS-LM Model: Language, Logic, and Limits
Robert G. King {robkin1}
<p>Macroeconomists are increasingly using a New IS-LM model to discuss the economy’s response to shocks and the design of monetary policy rules. This new model has better microfoundations than earlier IS-LM models and explicitly incorporates expectations about future economic conditions. Price level, or inflation rate, targeting is desirable in the New IS-LM model, for it stabilizes output at capacity. Such neutral policies require adjustments to the nominal interest rate as changes occur in the real economy.</p>
/RichmondFedOrg/publications/research/economic_quarterly/2000/summer/pdf/king.pdf
Inflation & Monetary Policy
1
Inflation
Monetary Policy
<p>Macroeconomists are increasingly using a New IS-LM model to discuss the economy’s response to shocks and the design of monetary policy rules. This new model has better microfoundations than earlier IS-LM models and explicitly incorporates expectations about future economic conditions. Price level, or inflation rate, targeting is desirable in the New IS-LM model, for it stabilizes output at capacity. Such neutral policies require adjustments to the nominal interest rate as changes occur in the real economy.</p>
Economic Quarterly
Summer
2000