"is trying to predict what those parameters will be ahead of...

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    "is trying to predict what those parameters will be ahead of time."

    One thing that he model predicted and did so quite well was that money printing under a liquidity trap would not cause inflation. If you were here 11 years ago hyperinflation was the buzzword. Then due to it not materializing the buzzword changed to fake statistics. Today the buzzword morphed once more. For the Peter Schiffs it is still hyperinflation but for some apparent Austrians posting here it is credit crunch followed by a depression as the bond vigilantes are about to restore the primacy of the markets (the good) over central bank monetary policy intervention (the evil). And because for them economics is a morality play, we have to suffer a massive depression in order to eliminate the consequences of our recent past and present day excesses.

    In Japan they lost a decade by opting for a stop and go approach. However, the present day indications are that the consequences of approach to economic management have been learned.

    The model has its faults one being the fact that it is an ad hoc model. It puts you in a depression environment without telling you how you got there because its concern it about how to get out from it, and as far as inflation is concerned it just warns you not to allow GDP to pass the full employment line.

    The question being: how do you know if the vertical full employment line has been passed? Apparently by looking at wages, that is, the price of labour.

    https://www.ldoceonline.com/dictionary/stop-go-approach-policies-etc

    A more complex explanation of the IS-LM model available here: https://s3.studentvip.com.au/notes/4579-sample.pdf
 
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