Expectations and the Desirability of Wage and Price Flexibility

1
Expectations and the Desirability of Wage and
Price Flexibility
Makroekonomi 2, S1, FEUI, 2009 Arianto A.
Patunru

• Scarth Chapter 4

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AD and AS System

• IS relationship
• Y C(1 k)Y I(i - p ) G (1)
• LM relationship
• M/P L(Y,i) (2)
• Phillips curve

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Inflationary expectations interest rates
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Adaptive expectations
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Pegged interest rates
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Monetarist policy and stability
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Convergence requirement
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Perfect foresight