1. – Professor, Department Of Economics, Panjab University, Chandigarh
| Received
14-Nov-2018 |
Accepted
- |
Published
14-Nov-2018 |
Abstract
The present paper suggests that
the logic of ISLM, as understood
by Keynes, permits a dynamic
version of it. The latter can illustrate
a short run that can capture
growth prospect facing it.
This understanding shows that
growth prospects define the monetary
prospects that in turn determine
the rate of interest, as a
monetary phenomenon. The comovement
of interest rate and
prices is a response to growth
prospects, and the former plays
the signaling device to indicate
the growth prospects facing the
current period. The broader conclusion
is monetary policy should
play a passive role and align the
rate of interest to actual growth
prospects; the policy focus is on
the management of the growth
prospects.
Locked
Subscribed
Open Access
Open Access