tag:blogger.com,1999:blog-1740670447258719504.post5174408591902806595..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Scott Sumner, meet the New Keynesian IS curve. New Keynesian IS curve, meet Scott SumnerEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1740670447258719504.post-84906309804293912022012-09-06T18:35:56.123-04:002012-09-06T18:35:56.123-04:00Daniel: I think the bit you crossed out was more o...Daniel: I think the bit you crossed out was more or less OK.<br /><br />The main reason I prefer to think of it as an upward-sloping IS curve rather than a shifting IS curve? Well, the whole point of having 2 curves is that you can separate out the things that shift the first from the things that shift the second. So we define the IS curves as "you know, that other curve thingy, the one that does NOT shift when monetary policy changes, so you can figure out where you end up when you change monetary policy."Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-43033752271745630132012-09-06T12:35:05.647-04:002012-09-06T12:35:05.647-04:00I've been reading a MM blogs for a long time, ...I've been reading a MM blogs for a long time, being a post-grad in econ I am also of course aware of New Keynesian macro models. I've come to the conclusion that MMists have a more radical and convoluted concept of expectations, more complex than rational expectations, but I don't really understand it. I think they just have a different philosophical approach to inter-temporal decisions regarding nominal spending/demand for money, based on some old esoteric monetary epistemology; I really can't make heads or tales of it. <br /><br />The main thing is that it's NOT expectations of interest rates, this is where New Keynesian economics departs from MMists: New Keynesian models generally ONLY have the short term nominal interest rate as the monetary policy tool. But to MMists it's about expectations of NGDP, and expectations that the central bank will do whatever it takes, whatever policy (unconventional or oherwise) is needed, or not. I.e. the signals are not about the future path of interest rates, the signal is about the underlying philosophy or attitude of the central bank.Britonomisthttp://neweconomicsynthesis.wordpress.com/noreply@blogger.com