Monetary and Budgetary-Fiscal Policy Interactions in a Keynesian Context: Revisiting Macroeconomic Governance

Angel Asensio

Chapter 6 in Aspects of Modern Monetary and Macroeconomic Policies, 2007, pp 80-105 from Palgrave Macmillan

Abstract: Abstract According to the New Consensus Macroeconomics (NCM), economic policy deals with different problems depending on the length of the period considered. If the period is long enough, competitive forces drive the rate of unemployment to the ‘natural level’. Theoretically, a succession of such periods should not exhibit statistical evidence of unemployment pressure on wages or consumer prices; the Phillips relation should look vertical. In each of these ‘long periods’, expected prices variations equal the effective values, and contracts are negotiated in accordance with the right expectations. That is the reason why systematic (hence expected) stimulations of aggregate demand1 do not reduce real wages and unemployment; they only strengthen inflation.

Keywords: Interest Rate; Monetary Policy; Central Bank; Real Wage; Aggregate Demand (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (4)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62734-5_6

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230627345

DOI: 10.1057/9780230627345_6

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().