This study developed a theoretical model in which decentralizing the implementation of stabilization policies, the variance of output around its mean, can be reduced, notwithstanding the macro rational expectation hypothesis. It also dealt with empirical tests of short-run theories of output determination across developed countries (United States, United Kingdom, Germany, Italy, Finland) and developing countries (Yugoslavia, Thailand, Sri Lanka, Pakistan, India). The neo-monetarist (or neo-classical) theory of output determination was tested against the monetarist and neo-Keynesian theory of output determination. The vector autoregressive model was used to test a number of restrictions implied by these theories. / The test results show that short-run neutrality of stabilization policies, as implied by the neo-monetarist theory of output behavior, is strongly rejected across both developed and developing countries. Thus, the monetarist and neo-Keynesian hypothesis that the short-run Phillips curve exists was accepted. / Although monetarists and Keynesians accept the short-run trade-off between inflation and unemployment, they disagree regarding the type of stabilization policies which can be used to exploit this short-run trade-off. This study also presented the empirical evidence from the developed and developing countries on the monetarist hypothesis that only monetary policy matters, against the neo-Keynesian hypothesis that both monetary and pure fiscal policies can be used to exploit the short-run Phillips curve. The test results show that the Keynesian hypothesis is rejected for all countries except India in this sample. / This study concludes that the short-run trade-off between inflation and unemployment exists, notwithstanding the rational expectation hypothesis, across developed and developing countries, and only monetary policy matters in exploiting this trade-off. / Source: Dissertation Abstracts International, Volume: 46-08, Section: A, page: 2373. / Thesis (Ph.D.)--The Florida State University, 1985.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_75607 |
| Contributors | CHOUDHARY, MUNIR AHMAD SULTAN., Florida State University |
| Source Sets | Florida State University |
| Detected Language | English |
| Type | Text |
| Format | 212 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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