New Study Reveals How Monetary Policy Stabilizes US Economy
The article introduces a model of economic growth based on two types of Phillips curves for wages and prices. The model suggests that the US economy has been stable due to the role of monetary policy. The researchers found that the growth path of the economy is influenced by centrifugal forces, but can be stabilized through wage or monetary policies. The study shows that the error-correction mechanism in the Phillips curves is ineffective, indicating that stability in the US economy comes from monetary policy.