Ambrosini Archive

IS/LM needs a bail-out

2008-11-24 · Original WordPress address

Somebody please defend our cherished models from the likes of this:
The economy needs a boost to aggregate demand and since monetary policy isn't working any more, fiscal policy has to step in. This is usually followed by drawing a graph with two or three curves on it.
I'm not going to do it, but somebody should.

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