Even so great men never gave up

それでもあきらめなった偉人たち

Consideration by the macro rational expectations models

And has attracted attention as the rational expectations hypothesis is widely Myusu are incorporated into a macro model by people like Robert Lucas and Thomas Sargent and early 1970s that tradition of theoretical or political consequences surprising because it showed a conflict of Keynesian economics. In other words, fiscal and monetary policies in order to control the level of national income is derived from the very drastic conclusion that no use.
Myusu of “rational expectations hypothesis” by showing a simple macro model with rational expectations together the points to be discussed with the theoretical structure is derived consequences.

Phillips Curve Revisited

Conflict between the Keynesian and Monetarist on the effectiveness of mainstream Keynesian Phillips curve has focused on aspects of their analysis, the theoretical framework that is considered no longer exist. The main conflict exists, and viewed in a trade-off based on value judgments. In other words, Keynesian fiscal policy is intended to regulate in the short term, it is a claim that the trade-off relationship between inflation and unemployment in the short-term and short-term decline. Monetarist argument for this is short-term (temporary) and the trade-off between inflation and long-term decline in unemployment, they are clearly lower than the temporary unemployment in the long term and considering the cost of rising prices.
Such a monetarist approach, which is explained by the theory leads to the concept of  macronetarist model inflation expectations and natural rate of unemployment. That is, in this model long-run Phillips curve will be measured perpendicular to the axis of unemployment, to deny the validity of the Keynesian
As a basis. But not necessarily so.
I shall be expressed as follows: the Phillips curve. That is,

Πt = βΠt *- α (u-_u) (1)
α> o, β> o

Here, Πt, Πt * t that it was realized during the inflation number, t-1 t formed in period represents the expected inflation rate for the year. (1) As is evident from the expression level of the unemployment rate was achieved when u _u the natural rate of unemployment over the
Negative effects on Πt, vice versa if the opposite holds. Therefore, (1) short-run Phillips curve is downward sloping is expressed indeed.
When β = 1, Πt = Πt * if u = _u Nearby, a long-term Phillips curve is equal to the actual inflation rate inflation rate expected natural rate of unemployment levels in the vertical and _u. In addition, o <β <1, consider the case. In order to simplify the t-phase formed in the expected inflation rate of 1 t t-stage with a match rate of inflation was achieved in one stage. That is,

Πt *= Πt-1 (2)

(1) (2) to obtain the following equation and substituting.

Πt = βΠt-1-α (u-_u) (3)

(3) In the formula, a certain level of unemployment u policymakers inflation nail if you try to do what would be the height. Equation (3) is the first-difference equations can be solved easily. That is,

Πt = βtΠ. -A (u-_u) (1-βt/1-β) (4)

Is determined. Π. Is, Π *= 0 starting from state, government spending by u
Represents the inflation rate will be sacrificed to achieve the level. (4) In the formula, t → +  ∞,

→ Πt-α (u-_u) / 1-β (5)

In other words, inflation can be seen that such a certain level convergence. If you try to inflation in the unemployment rate pegged to a certain level policy makers is certainly a cumulative increase, if verified that the long-run Phillips curve upward by the value of the estimated coefficient β.
Working with the monetarist inflation expectations (2) rather than the so-called expectations hypothesis of Shizuka Satoru like expression is considered a more general adaptive expectations hypothesis.

Friedman theory explanation of stagflation

According to Friedman, the actual inflation rate exceeds the expected rate of inflation, would have the effect of inflation on the real economy that is unexpected. That is, unexpected inflation, Friedman has what the Phillips curve trade　off between unemployment and the claim is. But to, and take the actual inflation on the vertical axis, as shown, a Phillips curve inflation forecasts for the fixed (short-run Phillips curve) are depicted, as inflation expectations percent higher than that α Under the rate
Another (as percentage moved upward α) will be short-run Phillips curve has been drawn.
Considering inflation expectations in the Phillips curve in this way, to the point that in terms such as α b, which results in real economic phenomenon of increasing unemployment  stagflation inflation rate, it is a short-term Given that the phenomenon can be explained by a transfer to another short-run Phillips curve from the higher expected rate of inflation Phillips curve.
In addition, a decrease in the acceleration of inflation can be explained as follows. Now, with the expected rate of inflation was zero, the short-run Phillips curve and therefore decided to. The policy makers, raising the inflation rate actually writing to extend fiscal and monetary policies, the unemployment rate and a lowered from A to. However, the expected rate of inflation will eventually be corrected to match the increase in real short-run Phillips curve will shift upward. That is called a (lower) in order to maintain the unemployment rate, we must achieve a higher inflation rate.
In other words, the fiscal and monetary policies must be extended is more and more.
The unemployment rate if policy makers try to nail a level, it is only by increasing the cumulative inflation rate. Thus, the phenomenon of acceleration of inflation would shift the curve described by Philip Short.

Identity of the monetarist

The monetarist approach, Milton, has been organized around Friedman’s claim. However, has been changing over time Friedman’s concept itself, including the point, what is the structure or monetarist theory is not always clear. Nevertheless, the following can be classified into three monetarist approach is not meaningless.
First, the basic proposition of the monetarist approach to determine the nominal income is to match supply and demand of money. Today, economists believe in the strict sense of the quantity theory of money like this, probably none will. Second, LM attention to the shape of the curve, perpendicular to the horizontal axis is the idea that LM is what economists assume a curve to the people. Tobin J · “Using the words of the paper flow Friedman Hicks, I it, LM thought that the shape of the curve (and still thinks so.) ” clearly stated. The third way is to focus on the effectiveness of Keynesian policies, regardless of Keynesian fiscal or monetary policy stance that is not valid.
LM scheme is a paradigm of economics is not.

Consideration by Manetarist model

H · G · Johnson, monetarist counter-revolution by force is considered and may gradually disappear, which include the following two points as the reason. First, “is far more important issue than mass unemployment inflation problem” and because, secondly “to see the standards of academic economics now dominates, the monetarist theory to the theory of money The approach has a markedly inferior”because it was the reason.
What he can really cut off. We recall Keynes’s General Theory appeared in the background, must be accepted or  again have the impact that much attention and why. Compared to the classical economics of the time, the logical integrity of the General Theory Keynes.I would say that was great.
Clarifying the identity of the monetarist, Friedman introduces the description of the stagflation of the voice of the person as a monetarist, you have to examine it.

Problems in the IS-LM analysis

Be summarized this way IS-LM analysis is to give effective guidelines for a common problem is the problem of stagflation in 1970, developed countries could not. It is the nature of this analysis was originally given pricing (_P) under a deal with the quantity adjustment model “fixed price” is no different from. Without Sutadafureshon problems of the theory of how to determine the price level is not handle. In other words, IS-LM model lacks any consideration to the supply side is another pillar of price level determination . Still noted as the starting point of the analysis of IS-LM analysis is thus clear that the really useful, which had become the common property of a long economic paradigm.
Indeed, such is IS-LM analysis is an integral part of Keynes’s theory is everyone admits. But speaking of things I swallowed it all the Keynesian theory, the vast majority of people would disagree.
The Keynesian aggregate supply function itself is neo-classical. For prices of production factors, and other labor and product price, if assumed to measure the maximization of profit as Tika price neoclassical firms have a hope of Shizuka Satoru, supply price equals marginal cost. Such companies also may be of the range to get the various problems under the current prices of production factors necessary for profit maximization, the price and supply limitations as a function of the amount calculated relationship with cost is found to be a function of The upward- sloping marginal productivity   law neo-classical theory of normal business activities. This so-called aggregate supply curve, IS-LM curves superimposed by moving prices aggregate demand derived in the analysis as in our case, it is possible to discuss the significance of the decision and the actual price level is calculated.
According to this analysis, the current rise in material prices, rising money wage rate, markup rate rise and increase the degree of oligopoly aggregate elasticity of demand is behind it all, or, above the aggregate supply curve to cause a shift. It appears that accompanied the rise in prices Wazaru be forced to drop in real income is evident from the figure. In other words, that will be tinged with aspects of cost-push inflation based on these factors.
As described above, in the textbook Keynesian theory, indicating that more or less constitute an explanation of stagflation Eru. But that pales to the analysis of Friedman monetarist representing this analysis is undeniable.

If the other extreme is represented by h the world is infinite

If the other extreme is represented by h the world is infinite. In such a world, (15) expression is simplified as follows

Yo = _a_A

This is a multiplier of the world, shows that virtually all income levels to determine the autonomous spending. If you fall into the hole if the economy is liquidity burnished, this may be the result.
As is clear from the above reasoning, the Keynesian economic model can represent the same framework as the classical model. In other words, Keynes’s ｇeneral ｔheory is brazenly called the model, the assumption that only classical theory,  the price is  institutional money demand is said to be highly flexible regarding the interest rate Is derived by imposing the condition. Such interpretation of the General Theory can say is the most common.

As to when to keep monetary policy unchanged

As to when to keep monetary policy unchanged from the money multiplier α, it shows how income affects how the equilibrium real money supply growth. In order to examine the effects of income and money supply (15) will use the expression as follows.

△ Yo / △ (_M / _P) = b_ a / h + bk_a    ≡ α  (20)

The smaller h and k, but also the larger _a and b, the effect of increasing the income level and equilibrium real balances are extensive. This is a steep slope with a horizontal LM curve corresponds to the IS curve.
To allow for the possibility of two extreme end (15) back to expression. Now, we define the ratio of income to money income. Or

V ≡ Y / (M / P) ≡ PY / M (21)

Here, PY is the nominal income level. Thus, V is the velocity ratio of income to the level of nominal income nominal money stock. Non-responsive if the demand for money if interest rates when it = 0, (15) expression is as follows.

Y = 1 / k · _M / _ P = V / (_P / M) (22)

Where V 1 ≡ / k    from the

PY = VM

This is the quantity theory of the world, where PY is the change in nominal income nominal amount of money will be proportionally reflected in changes in nominal income level. This is typically “classical case” is called a case. (23) equation, given the price level, if the rate is fixed income and real income may vary with changes in  nominal money supply. In this case, fiscal policy has no effect on the whole.

To match supply and demand

To match supply and demand, such as money markets and Y i try a combination of Seeking the formula shown. The demand for money L If so,

L = k Y – h i k> o
h> o (10)

Considered. The money supply M = _M / _P you, in equilibrium,

_M / _P = K Y – h i (11)

Be. Here, P is the price level (which is fixed) to represent. Such a combination of Y and i, and is commonly referred to as LM curve.
To determine the equilibrium level of income, it must be clear both goods and money markets. So, scratch and repeat here the goods and money market equilibrium condition, as follows.

Goods market Y = _a (_A – bi) (12)

However, _a = 1 / (1 – _c) represents the.

Money market i = 1 / h (k Y-_M / _P) (13)

Solving these two equations simultaneously, so you want to balance both markets at the same time, can be determined as a function of exogenous variables and the equilibrium interest rate equilibrium level of national income. Equation (13) (12) can be derived such as: If you assign.

Y = _a [_A – b / h (k y – _M / _P)]

Summarized and Y,

Yo = (h_a / h + kb_a) _A + (b_a / h + kb_a) _M / _P (15)

Yo where is the equilibrium level of national income. Exogenous variables and _A _M / _P hanging on the section can be viewed as a complex multiplier to reflect the effects of money, what characterizes the above models in this section. To be a meaningful addition Keijianmoderu as observed. (15), it is convenient to rewrite the following expressions somewhat simpler.

Yo = β_A + α (_M / _P) (16)

However, ≡ β h_a / h + bk_a (17)

And, ≡ α b_a / h + bk_a (18)

Here, β, α is a budget multiplier, respectively, to be called the money multiplier.
From budget multiplier β, real money supply increases in government spending
Do you know affect how equilibrium level of national income remain constant. (15) to examine the expression, consider the income effects of government spending. △ _G increase in government spending since the change of autonomous spending, △ _A = △ _G is. _G Change is given as follows.

△ Yo / △ G = h_ a / h + bk_a ≡ β (19)

(19) representation of the expression is zero if h is very small, if, while, if h is infinite if the show is equal to _a. This is a vertical LM curve, respectively, corresponding to a horizontal LM curve. Similarly, b or k can reduce the effects of government spending and income or greater value. Why. k also increases the value of income growth is greater, in order to maintain money market equilibrium implies that interest rates must rise significantly. This is because it means big savings from private-sector investment function also takes . This is the so-called crowding-out effect.