Transcript Expectations and the Desirability of Wage and Price Flexibility Scarth Chapter 4
Makroekonomi 2, S1, FEUI, 2009 – Arianto A. Patunru Expectations and the Desirability of Wage and Price Flexibility Scarth Chapter 4
AD and AS System • IS relationship Y = C[(1 – k)Y + I(i - π ) + G • LM relationship M/P = L(Y,i) • Phillips curve
P
f
Y Y Y
(
P
) (1) (2) ( 3 ) ( 4 )
Inflationary expectations & interest rates
Adaptive expectations
Pegged interest rates
Monetarist policy and stability
Convergence requirement
y
y
(
m
f
( ( (
y
p
)
y
) ) )
f
( )(
y
y
) ( 5 ) ( 6 ) ( 7 ) ( 8 )
f y
g
Perfect foresight (
m
p
)
f
(
y
1 /(
y
) /
a
)
y dy
1
dg
f
1 [
g
/( 1
f
) (
m
p
)
y
1
f
f
(
y
y
) ( 9 ) ( 10 ) ( 11 )
f y
] ( 12 ) ( 13 ) ( 14 )