2009 | OriginalPaper | Chapter
Macroeconomic Policy, Interest Rates and National Income
Author : Anthony J. Makin
Published in: Global Imbalances, Exchange Rates and Stabilization Policy
Publisher: Palgrave Macmillan UK
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This chapter develops an alternative international macroeconomic model for evaluating the effectiveness of fiscal and monetary policy in stabilizing national income under fixed and floating exchange rates. It encompasses national output and income, saving, investment, the current account, interest rates and the money supply, while incorporating long-recognized linkages between the exchange rate, price levels and real interest rates, consistent with conventional international parity conditions.