1997 | OriginalPaper | Chapter
Principal Mechanisms in MM
Authors : Professor Alan A. Powell, Christopher W. Murphy
Published in: Inside a Modern Macroeconometric Model
Publisher: Springer Berlin Heidelberg
Included in: Professional Book Archive
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This chapter reviews important paradigms that heavily influence the architecture of MM. We commence with some well known contributions to the pure theory of macroeconomics; in particular, we focus on the work of Mundell and Fleming and on Dornbusch’s model of overshooting exchange rates. Some brief attention is paid also to the open-economy macro models that were developed during the 1980s; a characteristic of the latter is the incorporation of a binding intertemporal budget constraint on the actions of governments.