Anti-inflation Policy : The Pursuit of Price Stability
In Chapters 6 and 7 we discussed various policy questions relating to the objectives of internal balance and external balance within the framework of the theoretical material presented in Chapters 2 to 5. In the present chapter we turn to the third of the four macro-objectives considered in the first chapter of the book — the objective of price stability. As in Chapters 6 and 7 our aim will be to consider the ways in which this objective can be attained, and to do this, moreover, within a fairly tight theoretical framework. In this case the theoretical background for our discussion will be the model developed in the preceding chapter. It seems fair to say that this model, or a model which resembles it very closely, underlies all contemporary discussion of policy in relation to the price-stability objective.
KeywordsExcess Demand Price Stability Wage Equation Price Equation Money Income
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