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Memorandum, Department of Economics, University of Oslo >
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http://hdl.handle.net/10419/47325
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| Title: | | Overdeterminacy and endogenous cycles : Trygve Haavelmo's business cycle model and its implications for monetary policy  |
| Authors: | | Anundsen, André K. Krogh, Tord S. H. Nymoen, Ragnar Vislie, Jon |
| Issue Date: | | 2011 |
| Series/Report no.: | | Memorandum // Department of Economics, University of Oslo 2011,03 |
| Abstract: | | This paper presents the business cycle model that Trygve Haavelmo developed as part of his research program in macroeconomic and monetary theory. Driven by a mismatch between the marginal return to capital and the rate of return required by capital owners, this model generates endogenous cycles. The theory leads to a distinct analysis of the scope and limitations of monetary policy. A main message of the model is that care should be taken when conducting 'autonomous' monetary policy and that special emphasis should be put on the soundness of nancial markets. Adopting a strict nominal anchor as the main objective of monetary policy might generate imbalances in the capital market. |
| Subjects: | | investments business cycles monetary policy |
| JEL: | | E22 E32 E44 E52 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Memorandum, Department of Economics, University of Oslo
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