Macroeconomic theory and monetary policy: the contributions of Franco Modigliani and the ongoing debate

Lucas Papademos

Abstract


The paper reviews some of the most important results of the LCH for understanding individual and aggregate saving behaviour. It then turns to the implications for fiscal policy and social security, highlighting Modigliani's seminal contributions. Over time competing theories have emerged, and some empirical findings are difficult to reconcile with LCH; chiefly aspects of inertia, myopia, and irrational behaviour documented by the recent behavioural literature. But the LCH is still the benchmark model to think about individual saving decisions, the aggregate evidence and policy issues.

  

JEL Codes: B22, B31, E52


Keywords


Macroeconomics, Monetary Policy, Monetary, Policy

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References


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