Farmer, Roger E. A. and Platonov, Konstantin (2019) Animal spirits in a monetary model. European Economic Review , 115 . pp. 60-77. doi:10.1016/j.euroecorev.2019.02.005 ISSN 0014-2921.

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Abstract

We integrate Keynesian economics with general equilibrium theory in a new way. We develop a simple graphical apparatus, the IS-LM-NAC framework, that can be used by policy makers to understand how policy affects the economy. A new element, the No-Arbitrage-Condition (NAC) curve, connects the interest rate to current and expected future values of the stock market and it explains how ‘animal spirits’ influence economic activity. Our framework provides a rich new approach to policy analysis that explains the short-run and long-run effects of policy.

Item Type:	Journal Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Keynesian economics, Equilibrium (Economics)
Journal or Publication Title:	European Economic Review
Publisher:	Elsevier
ISSN:	0014-2921
Official Date:	June 2019
Dates:	Date Event June 2019 Published 6 March 2019 Available 14 February 2019 Accepted
Volume:	115
Page Range:	pp. 60-77
DOI:	10.1016/j.euroecorev.2019.02.005
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
Date of first compliant deposit:	20 February 2019
Date of first compliant Open Access:	6 March 2021
Related URLs:	Publisher

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