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Combination Monetary Feedback Rule Affects Output

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 February 1990

109

Abstract

The effectiveness of combination monetary feedback rule and fiscal policy under rational expectations is examined. The fiscal policy takes into account not only a progressive tax structure but also government expenditure. The model consists of IS and LM relationships and a Lucas supply function. The model is solved analytically. Both the progressive tax structure and the combination monetary feedback provide an automatic but not immediate adjustment to reduce the expectation error. Therefore the behaviour of real output is influenced not only by the disturbance terms but also by the policy parameters of the progressive tax structure and the combination monetary feedback rule.

Keywords

Citation

Chen, C. (1990), "Combination Monetary Feedback Rule Affects Output", Journal of Economic Studies, Vol. 17 No. 2. https://doi.org/10.1108/01443589010006261

Publisher

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MCB UP Ltd

Copyright © 1990, MCB UP Limited

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