Some Pleasant Monetarist Arithmetic
17 Pages Posted: 4 Jul 2004 Last revised: 16 Jan 2022
Date Written: March 1984
Abstract
Contrary to the conclusion of Sargent and Wallace, it is possible to exogenously and independently vary monetary and fiscal policy and retain steady-state equlibrium in economies like the United States. In particular,the central bank is not forced to monetize increased deficits either now or in the future. This conclusion is based on the fact that the real after-tax yield on government bonds is considerably less than the growth rate of real income except during brief disinflationary periods.
Suggested Citation: Suggested Citation
Darby, Michael R., Some Pleasant Monetarist Arithmetic (March 1984). NBER Working Paper No. w1295, Available at SSRN: https://ssrn.com/abstract=321338
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