2003 Fiscal Year Final Research Report Summary
Foundation and Application of the IS-LM Model
| Project/Area Number |
14530019
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
経済理論
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| Research Institution | Keio University |
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Principal Investigator |
OHYAMA Michihiro Keio University, Economics, Professor, 経済学部, 教授 (10051517)
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| Project Period (FY) |
2002 – 2003
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| Keywords | IS-LM Model / AD-AS Model / Optimizing Behavior / Robertsonian Log / Microeconomic basis / Consumption Externalities / Mundel-Fleming Model / Keynesian Theory |
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| Research Abstract |
The purpose of the present study is to develop a new microeconomics of the IS-LM (or AD AS) analysis reflecting the representative consumers' optimizing behavior and consider its applications to policy problems. unemployment. Our study aims to rationalize the core concepts of the Kenyesian theory such as the paradox of thrift and investment multiplier focusing on the demand side of the economy. In the first year, we constructed a new general equilibrium period model of a closed monetary economy with a Robertsonian payment lag where money is used both as a means of payment acid a store of value. We extended a simplified version of this model to incorporate consumption externalities and cooperation failure among consumers and rationalized Keynesian activist policies on that basis. In the second year, we further extended our basic model to reformutate the Mundell-Fleming model, often criticized for lack of microeconomic foundations and yet widely employed among practical economists to discuss macroeconomic policies in open economies. We used this model to reconsider the famous Mundell proposition on the efficacy of fiscal policy under the flexible exchange rates and investigate the dynamics of the balance of payments adjustment. We have attempted to estimate consumption function and money demand functions derived from our basic model, but have failed to obtain satisfactory results by this time.
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