rational expectations, nonlinearities, and the effectiveness of monetary policy

Snower, Dennis J. (March 1980) rational expectations, nonlinearities, and the effectiveness of monetary policy. Forschungsberichte / Research Memoranda 150

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summary: this paper contends that even if the rational-expectations hypothesis and the natural-rate hypothesis both hold, systematic monetary policy may nevertheless be able to influence output and employment, provided that the relation between the money supply and the price level is nonlinear. such a nonlinear relation is suggested by a variety of theoretical considerations. the paper contains a well known macroeconomic model in which this nonlinearity occurs. in this context, it is shown how systematic monetary policy is able to manipulate output and employment in accordance with predetermined policy goals.;

Item Type: IHS Series
Status: Published
Date Deposited: 26 Sep 2014 10:34
Last Modified: 01 Apr 2016 14:07
URI: http://irihs.ihs.ac.at/id/eprint/150

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