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Supply of Output and Inflation in EC Countries

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Abstract

The theory of Chapter 2 explains domestically-produced output, domestic prices and the overall price level in terms of foreign prices, money, the exchange rate and other impulses. The central feature of the theory is the Lucas supply of output extended to an open economy which incorporates, in addition to inflation-rate misperceptions, terms-of-trade effects, the ‘tax wedge’ and wage indexation.

Keywords

Business Cycle Rational Expectation Quarterly Data Supply Shock Money Stock 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Paul De Grauwe, Michele Fratianni and Mustapha K. Nabli 1985

Authors and Affiliations

  1. 1.Catholic University of LeuvenBelgium
  2. 2.Indiana UniversityUSA
  3. 3.University of TunisTunisia

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