Keynesian Macroeconomics without the LM Curve

By David H. Romer. 2001

509 citations recorded by the source corpus.

Changes in both the macroeconomy and in macroeconomics suggest that the IS-LM-AS model is no longer the best baseline model of short-run fluctuations for teaching and policy analysis. This paper presents an alternative model that replaces the assumption that the central bank targets the money supply with an assumption that it follows a simple interest rate rule. The resulting model is simpler, more realistic, and more coherent than IS-LM-AS, not just in its treatment of monetary policy but in many other ways. The paper also discusses other alternatives to IS-LM-AS.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/f351cec566bb25fe1d4fe0ab46d391d98bcbf4b2

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In Economics and Econometrics

Citations in the corpus

Financial Structure, Macroeconomic Stability and Monetary Policy (2001, unknown): “23 Romer (2000) provides a very description of how to derive this simple model. where ! is the slope coe±cient.”
Interest rates, distribution and capital accumulation – A post-Kaleckian perspective on the US and Germany (2011, unknown): “See Clarida/Gali/Gertler (1999), Goodfriend (2007), McCallum (2001), Meyer (2001), Romer (2000) , Taylor (2000), and Carlin/Soskice (2006: 27-172) for NCMs.”
Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model (2010, background): “Smithin (2004), for example, suggests that the real interest rate should be set to zero, or as close to zero as possible, allowing rentiers to maintain their stock of real wealth but not to participate in real growth.”
An alternative explanation of the price puzzle (2004, unknown): “The same model is used in Rudebusch and Svensson (1999), Judd and Rudebush (1998), Romer (2000) , Hansen and Sargent (2000) and, extended to a small open economy, Ball (1999).”
Using Monetary Policy Rules in Emerging Market Economies (2000, unknown): “2 See Frank and Bernanke (2001), Romer (2000), and Taylor (1995, 2001).”
Putting "M" Back in Monetary Policy (2003, unknown): “Monetary policy without money is so widely accepted that it now appears in pedagogical writings at the undergraduate and graduate levels [Romer (2000), Stiglitz and Walsh (2002), or Woodford (2003)].”
Financial Intermediation and Macroeconomic Analysis (2010, unknown): “On the relation between IS–MP analysis and the older IS–LM analysis, see, for example, Romer (2000) in this journal.”
Is the Nairu Theory a Monetarist, New Keynesian, Post Keynesian or a Marxist Theory? (2008, background): “14 References include Sarantis (1993), Rowthorn (1995), Arestis and Biefang-Frisancho Maricsal (1998), Alexiou and Pitelis (2003) and Stockhammer (2004a).”
Defense Spending Promotes Aggregate Output in the United States--Evidence from Cointegration Analysis (2002, background): “Recently, Romer (2000) and Taylor (2000) presented a new macroeconomic model as a replacement for the standard IS-LM and AD-”