IS-LM and the mutiplier: A dynamic general equilibrium model

Abstract : We construct a dynamic general equilibrium model which displays the central features of the IS-LM model, and notably an income multiplier greater than one, so that crowding out does not occur. A key to this result is the conjunction of two features: price rigidities (as is usually expected), but also a non-Ricardian economy.
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Submitted on : Tuesday, November 20, 2012 - 8:48:44 AM
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Jean-Pascal Bénassy. IS-LM and the mutiplier: A dynamic general equilibrium model. Economics Letters, Elsevier, 2007, 96 (2), pp.189-195. ⟨10.1016/j.econlet.2006.12.028⟩. ⟨halshs-00754211⟩

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