Macroeconomic theory and monetary policy: the contributions of Franco Modigliani and the ongoing debate

Lucas Papademos
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Lucas Papademos: European Central Bank, Frankfurt am Main (Germany)

BNL Quarterly Review, 2005, vol. 58, issue 233-234, 187-214

Abstract: The paper reviews some of the most important results of the LCH for understanding individual and aggregate saving behaviour. It then turns to the implications for fiscalpolicy and social security, highlighting Modigliani's seminal contributions. Over time competing theories have emerged, and some empirical findings are difficult to reconcile with LCH, chiefly aspects of inertia, myopia, and irrational behaviour documented by the recent behavioural literature. But the LCH is still the benchmark model to think about individual saving decisions, the aggregate evidence and policyissues.

Keywords: Macroeconomics; Monetary Policy; Monetary; Policy (search for similar items in EconPapers)
JEL-codes: B22 B31 E52 (search for similar items in EconPapers)
Date: 2005
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