Journal of Economic Perspectives: Vol. 14 No. 2 (Spring 2000)


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Keynesian Macroeconomics without the LM Curve

Article Citation

Romer, DavidH. 2000. "Keynesian Macroeconomics without the LM Curve." Journal of Economic Perspectives, 14(2): 149-169.

DOI: 10.1257/jep.14.2.149


Changes in both the macroeconomy and in macroeconomics suggest that the IS-LM-AS model is no longer the best baseline model of short-run fluctuations for teaching and policy analysis. This paper presents an alternative model that replaces the assumption that the central bank targets the money supply with an assumption that it follows a simple interest rate rule. The resulting model is simpler, more realistic, and more coherent than IS-LM-AS, not just in its treatment of monetary policy but in many other ways. The paper also discusses other alternatives to IS-LM-AS.

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Romer, David H. (U CA, Berkeley)

JEL Classifications

E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian


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