Some Further Evidence on the Policy Ineffectiveness Proposition

B. Rao

No 149, Working Papers from University of Sydney, School of Economics

Abstract: In the empirical literature of the new classical model and its criticisms, the unemployment equation received much attention. In this paper we shall examine the validity of the new classical policy ineffectiveness proposition, using the output equation. Non-nested hypothesis tests are used to evaluate the Keynesian and new classical output equations. Our results, based on the U.S. data, show that the new classical model and the policy ineffectiveness proposition are conclusively rejected by the Keynesian model for the periods 1946-1985 and 1946-1989.

Date: 1990-11
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Journal Article: Some Further Evidence on the Policy Ineffectiveness Proposition (1992)
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