In standard solutions, the new-Keynesian model produces a deep recession with deflation in a liquidity trap. The model also makes unusual policy predictions: Useless government spending, technical regress, and capital destruction have large multipliers. These predictions become larger as prices become less sticky. I show that both data and policy predictions are strongly affected by equilibrium...

In standard solutions, the new-Keynesian model produces a deep recession with deflation in a liquidity trap. Useless government spending, technical regress, and capital destruction have large positive multipliers. The recession, deflation and policy paradoxes are larger when prices are less sticky. I show that these features are all artifacts of equilibrium selection. For the same interest-rate...

I hope, for the sake of economics, that the Keynesian and monetafist approaches do not lead to such opposite results as Professor Claassen supposes. I believe, in fact, that Professor Claassen imputed to a difference in economic analysis what is really due to a difference in. the situations under examination. The situation which Professor Claassen examines in his comment is one which in Keynesi...

This paper intends to discuss some problematic aspects that IS-LM have when dealing with fiscal deficits, especially when considering loanable funds model. Many others have focused on its assumptions for criticism of IS-LM, but I will mainly focus on its fundamental modelling nature. To say more specifically, I will argue that ordinary ISLM analysis is in contradictory nature to simultaneous eq...

Abstract The objective of this article is to carry out a review the links between institutional and post-Keynesian economics, in order raise possible compatibility even complementarity two branches economic thought. To end, we first question from perspective economics then post-keynesian standpoint. Next, methodological issues are addressed by presenting essential elements that characterize met...

In their interesting paper, Fabia de Carvalho and Maurício Bugarin alter the infor-mational assumptions I employed in Walsh (2000) and discuss how this change affects the results reported in my paper. The structure of the underlying model I used, and therefore the rationale for the informational assumption, was designed to capture two factors. First, inflation models developed in the new Keynes...