Why would paul romer in 2000 suggest dropping

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John Hicks, in his original macroeconomic model, the IS-LM model, developed the LM curve to show the combinations of the real interest rate and output that result in equilibrium in the market for money.

The LM curve assumes that monetary policy takes the form of the Federal Reserve choosing a target for the money supply. Why would Paul Romer in 2000 suggest dropping the traditional LM curve and replacing it with the MP curve?

Reference no: EM131302665

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