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A More Detailed IS-LM Story

Martin Hiermeyer

MPRA Paper from University Library of Munich, Germany

Abstract: Textbooks give a fairly short IS-LM story. This paper offers a more detailed one. This story has several advantages vis-à-vis the usual textbook story, including: (a) it is clear about what it means by "money"; (b) it describes the central bank as targeting an interest rate; and (c) it covers the money multiplier and quantitative easing. To unfold, the more detailed story requires only minor adjustments to the IS-LM model, mostly the addition of the quantity equation of money – a mere identity.

Keywords: Fiscal policy; monetary policy; teaching of economics (search for similar items in EconPapers)
JEL-codes: A2 E52 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon and nep-pke
Date: 2017-08-25
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https://mpra.ub.uni-muenchen.de/81004/1/MPRA_paper_81004.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/81248/1/MPRA_paper_81248.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/82280/1/MPRA_paper_82280.pdf revised version (application/pdf)

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