MONETARY THEORY AND MACROECONOMICS. IMPACT AND LIMITS OF MONETARY POLICY

Abstract

The paper proposes a macro model of the economic system, which is composed of its real and financial sectors,affecting the dynamics of the gross domestic product. As a theoretical basis for the formation of the model taken loan funds theory, defining the notion of equality of capital in various forms - investment and savings. This theoryenables the expense of the basic equation of “loan funds” monetary aspects that determine the dynamics of the product. As a result, it becomes possible to obtain expressions for the different scenarios of the GDP percent change in real money, depending on the different institutional settings of monetary policy, and policies affecting the interest rate. It shows the use of two versions of the Fisher equation in relation to the assessment of monetary policy, as well as analytical for exactly two-sector model of the economy derived border changes in the money supply in order to ensure the growth of the economy at the same time a positive change in their structure (given the two sectors).