Munich Personal RePEc Archive

An Improved IS-LM Model To Explain Quantitative Easing

Hiermeyer, Martin (2019): An Improved IS-LM Model To Explain Quantitative Easing.

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Abstract

The paper combines the IS-LM model with a Tobin-style ‎analysis of the banking system. As suggested by Krugman, the resulting model has great predictive power. It can explain quantitative easing and its effect on the economy, helicopter money and money creation by banks. Also, it is free of the normal shortcomings of the IS-LM model.

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