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Endogenous I-S and External L-M Diagram in Equilibrium towards Policy-Making

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  • Hideyuki Kamiryo

Abstract

This paper reforms the conventional I-S and L-M diagram endogenously, clarifying how to finalize the relationship between the real and financial assets, replacing the I-S by the rate of return function of the ratio of investment to output/income and the L-M by the ratio of M2 to endogenous capital K, after verifying the neutrality of the markets to the real assets, and using endogenous parameters and variables in the 58 country data-sets, 1990–2007 (KEWT 3.09), with three average areas, where equilibrium holds by year, country, and sector, over years. This diagram and its interpretation are able to present urgent policies for perceiving a bud of bubbles and suggesting urgent steps not to reoccur bubbles. Copyright International Atlantic Economic Society 2010

Suggested Citation

  • Hideyuki Kamiryo, 2010. "Endogenous I-S and External L-M Diagram in Equilibrium towards Policy-Making," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(3), pages 282-296, August.
    • Handle: RePEc:kap:iaecre:v:16:y:2010:i:3:p:282-296:10.1007/s11294-010-9261-4
    DOI: 10.1007/s11294-010-9261-4
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    1. Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Chapters, in: The Demand for Money: Some Theoretical and Empirical Results, pages 1-29, National Bureau of Economic Research, Inc.
    2. David Durand, 1957. "Growth Stocks And The Petersburg Paradox," Journal of Finance, American Finance Association, vol. 12(3), pages 348-363, September.
    3. Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-472, June.
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    Cited by:

    1. Hideyuki Kamiryo, 2015. "Hyperbola Economics Towards A Utopian Economy," Hyperbola Economics towards A Utopian Economy, Better Advances Press, Canada, edition 1, number 01 edited by Dr. Yisheng Huang, May.
    2. repec:bap:hetaue:01 is not listed on IDEAS

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    More about this item

    Keywords

    I-S and L-M; Neutrality of the markets; Endogenous equilibrium; Endogenous capital; Endogenous and external inflation rates; The rate of return in equilibrium; M2; Ten year debt yield; Exchange rate; Bubbles; E60-1; (E40; E50);
    All these keywords.

    JEL classification:

    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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