Abstract. It is shown that if the supply of capital is properly incorporated in a macromodel with rational expectations, the government cannot peg its expenditures wholly in real terms since, otherwise, the economy will be globally unstable.
Professor Emeritus
Abstract. It is shown that if the supply of capital is properly incorporated in a macromodel with rational expectations, the government cannot peg its expenditures wholly in real terms since, otherwise, the economy will be globally unstable.