Monetary and Fiscal Dynamics

Carlberg, Michael

The analysis will be conducted within an IS-LM model augmen- ted by the dynamics of money wages, private capital and public debt. A macroeconomic shock induces an extended process of adjustment that is characterized by unemployment. This in turn requires a dynamic path of monetary and fiscal policy: As a response to the shock, the central bank continuouslyadapts the quantity of money so as to keep up full employment all the time. And the government continuously accommodates its purchases of goods and services. Can this be sustained? Or will public debt tend to explode, thereby driving the stock of capial down to zero?

Details

Published by: Physica

Publication Date: 1992-06-17

Format: Paperback

ISBN-13: 9783790806199

DOI: 10.1007/978-3-642-47689-1

Dimensions: 244cm x170cm

Pages: 194