Critique of IS-LM: fiscal deficits, loanable funds, Keynesian Cross and IS-LM

Minseong Kim

MPRA Paper from University Library of Munich, Germany

Abstract: This paper intends to discuss some problematic properties IS-LM and loanable funds together have when dealing with fiscal deficits. Many others have focused on its assumptions for criticism of IS-LM, but I will mainly focus on its fundamental modelling nature. To say more specifically, I will argue that ordinary IS-LM analysis is in contradictory nature to simultaneous equilibrium system, and therefore loanable funds.

Keywords: IS-LM; loanable funds; budget deficits; fiscal policy; fiscal multiplier; simultaneous equilibrium (search for similar items in EconPapers)
JEL-codes: B22 E12 E21 E22 E43 (search for similar items in EconPapers)
Date: 2014-09-21
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:59422

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