Macroeconomic dynamics and the IS puzzle

Raymond J. Hawkins and Chau N. Nguyen

No 2017-20, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The authors solve the IS puzzle for the G7 countries. They find that five of the G7 countries have the expected significant negative relationship between the output gap and the realrate gap; the time series of the remaining two show material deviation from expected IScurve behavior. The authors show that the observed time dependence of the interaction between the output and real-rate gaps can be represented in a parsimonious and practical manner using the theory of anelasticity that unifies partial-adjustment specifications of the IS curve.

Keywords: macroeconomics; IS curve; inflation; anelasticity (search for similar items in EconPapers)
JEL-codes: C22 E3 E32 E52 E61 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-dcm and nep-mac
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http://www.economics-ejournal.org/economics/discussionpapers/2017-20
https://www.econstor.eu/bitstream/10419/158562/1/888183593.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201720

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