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Keynesian economics without the Phillips curve
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Farmer, Roger E. A. and Nicolò, Giovanni (2018) Keynesian economics without the Phillips curve. Journal of Economic Dynamics and Control, 89 . pp. 137-150. doi:10.1016/j.jedc.2018.01.012 ISSN 0165-1889.
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Official URL: http://dx.doi.org/10.1016/j.jedc.2018.01.012
Abstract
We extend Farmer’s 2012b Monetary (FM) model in three ways. First, we derive an analog of the Taylor Principle and we show that it fails in U.S. data. Second, we use the fact that the model displays dynamic indeterminacy to explain the real effects of nominal shocks. Third, we use the fact the model displays steady-state indeterminacy to explain the persistence of unemployment. We show that the FM model outperforms the New-Keynesian model and we argue that its superior performance arises from the fact that the reduced form of the FM model is a VECM as opposed to a VAR.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Keynesian economics, Phillips curve | ||||||||
Journal or Publication Title: | Journal of Economic Dynamics and Control | ||||||||
Publisher: | Elsevier BV | ||||||||
ISSN: | 0165-1889 | ||||||||
Official Date: | April 2018 | ||||||||
Dates: |
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Volume: | 89 | ||||||||
Page Range: | pp. 137-150 | ||||||||
DOI: | 10.1016/j.jedc.2018.01.012 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 29 January 2018 | ||||||||
Date of first compliant Open Access: | 29 January 2018 |
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