Citation

Discussion Paper Details

Please find the details for DP12298 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Keynesian Economics without the Phillips Curve

Author(s): Roger E A Farmer

Publication Date: September 2017

Keyword(s): Indeterminacy, Keynesian economics and money

Programme Area(s): Monetary Economics and Fluctuations

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 NK 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.

For full details and related downloads, please visit: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12298

Bibliographic Reference

Farmer, R. 2017. 'Keynesian Economics without the Phillips Curve'. London, Centre for Economic Policy Research. http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12298