Abstract
This paper presents a Post-Keynesian interpretation of the usual three-equation model of New Consensus macroeconomics. The IS curve, Phillips curve, and monetary rule are obtained from stylized facts instead of intertemporal optimization, while price inertia and the government's inflation target drive expected inflation. The result is a model with no unique natural rate of interest. The central bank can still stabilize the economy through trial and error, with demand and supply shocks altering the system's equilibrium and the possibility of secular stagnation.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
