krause_03

Emory University
Department of Economics
Working Papers

Title: Optimal Monetary Policy and the Equivalency between the One-Period AD-AS Model and the Forward-Looking New Keynesian Model *

Number: 03-17

Author: Stefan Krause

Issue Date: September 2003 (revised, May 2004)

Abstract: We show how a one-period aggregate demand - aggregate supply (AD-AS) model yields equivalent expressions for inflation and output under optimal monetary policy as a forward-looking New Keynesian model. Furthermore, we analyze the advantage the AD-AS model has over the New Keynesian specification when evaluating policy efficiency.

Title:	Optimal Monetary Policy and the Equivalency between the One-Period AD-AS Model and the Forward-Looking New Keynesian Model *
Number:	03-17
Author:	Stefan Krause
Issue Date:	September 2003 (revised, May 2004)
Abstract:	We show how a one-period aggregate demand - aggregate supply (AD-AS) model yields equivalent expressions for inflation and output under optimal monetary policy as a forward-looking New Keynesian model. Furthermore, we analyze the advantage the AD-AS model has over the New Keynesian specification when evaluating policy efficiency.

* Applied Economics Letters, forthcoming

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