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ECON2004Lecture06

ECON2004Lecture06 - IS(LM plus microfounded models of...

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ECON2004 Macro Term 1, Lecture 6: The Phillips Curve 1 Lecture 6: The Phillips curve Reading. Core: Blanchard 6, 8.2 Carlin and Soskice 3.1 Optional: cepa.newschool.edu/het/essays/keynes/publicpolicy.htm Advanced: Friedman, Milton (1968), “The Role of Monetary Policy” cepa.newschool.edu/het/essays/monetarism/friedmanchicago.htm The Phillips Machine www.sciencemuseum.org.uk/objects/computing_and_data_processin g/1995-210.aspx ECON2004 Macro Term 1, Lecture 6: The Phillips Curve 2 IS-(LM) plus .... …microfounded models of: consumption investment (money demand) What’s still missing?
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ECON2004 Macro Term 1, Lecture 6: The Phillips Curve 3 The Phillips Curve For the UK (from Phillips, 1958) For the US (from Samuelson and Solow, 1960) ECON2004 Macro Term 1, Lecture 6: The Phillips Curve 4 Policy implications Which point policymakers choose depends on their over output and inflation
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ECON2004 Macro Term 1, Lecture 6: The Phillips Curve 5 The neo-classical synthesis "What is needed more than anything else is a mechanism which would enable us to regulate our economy so as to maintain a reasonable degree of economic activity: on the one hand to prevent any considerable unemployment of resources and on the other hand to prevent the stresses of the overemployment of resources and the disorganization we know as inflation." (Abba Lerner, 1941).
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