Reactions to Policy
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Reactions to policy have been of interest to economists for many years. However, concern about these reactions has taken a new form recently and has received considerable attention from the school of rational-expectations economists. One of the concerns of this school has been that feedback rules cannot be used for policy because the announcement of the rule will cause people to change their behavior which means that a different rule should have been proposed. These concerns are viewed by many as an important limitation of the feedback framework. Therefore they will be discussed in this chapter beginning with an earlier interest in reactions to policy and proceeding to the recent discussion.
KeywordsMoney Supply Disposable Income Recent Discussion Behavioral Parameter Disp Income
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