AD–IA model: Difference between revisions

Revision as of 03:42, 25 October 2006

Revision as of 20:05, 6 December 2006

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Economist David Romer proposed in the Journal of Economic Perspectives in 2000 that the LM curve be replaced in the [[IS-LM]] model. Romer suggested that although the Federal Reserve uses open market operations to impact the federal funds rate, they are not targeting money supply, but rather the interest rate. Therefore, he suggests removing the LM curve and replacing it with the MP curve.

== Related Models ==

[[IS-LM]]

[[Real Business Cycle Theory]]

* [[IS-LM]]

* [[Real Business Cycle Theory]]

== See Also ==

* [[Monetary policy]]

* [[Federal Reserve System]]

[[Federal Reserve System]]

[[Category:Macroeconomics]]