Optimal monetary policy and the equivalency between the one-period AD-AS model and the forward-looking New Keynesian model

Stefan Krause Montalbert

Applied Economics Letters, 2006, vol. 13, issue 9, 541-544

Abstract: It is shown how a one-period aggregate demand-aggregate supply (AD-AS) model yields equivalent expressions for inflation and output under optimal monetary policy as a forward-looking New Keynesian model. Furthermore the advantage that the AD-AS model has over the New Keynesian specification when evaluating policy efficiency is evaluated.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:13:y:2006:i:9:p:541-544

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DOI: 10.1080/13504850600691093

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