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- Title
DYNAMIC MONETARY THEORY ANDTHE PHILLIPS CURVE WITH A POSITIVE SLOPE.
- Authors
RAVIER, ADRIÁN O.
- Abstract
Don Bellante and Roger W. Garrison (1988) compared two alternative explanations of monetary dynamics: those based on a vertical long-run Phillips curve and those derived from analysis of Hayekian triangles. The authors concluded that the only factor differentiating the two models is the "process" whereby the initial cause is converted into the final "neutral" effect. This article refutes that conclusion. To do so, it suffices to demonstrate that the long-term effect of monetary policy is never neutral. While it is true that after the boom and bust the economy returns to the natural rate of unemployment, the crucial point is that the "natural rate" at the end of the cycle is quite different from the one evident at the start. This requires an "Austrian" Phillips curve with a positive slope.
- Subjects
MONETARY policy; MONETARY theory; MONETARY systems; PHILLIPS curve; UNEMPLOYMENT
- Publication
Quarterly Journal of Austrian Economics, 2013, Vol 16, Issue 2, p165
- ISSN
1098-3708
- Publication type
Article