Chapter 11

Empirical Evidence Supporting Monetary Policy

The previous ten chapters provide a minute fraction of what needs to be said about monetary theory and its policy implications. Scholars have been writing about monetary theory, policy, or both for over two centuries. The focus of the present book has been broad and conceptual. For example, the detailed analytical requirements of applying rational expectation hypothesis have been bypassed in order to explain what it means and what its implications are.

Economic theories are formed to explain the economic behavior of humans. There is no economic theory without a human element. It is important to validate economic theories through empirical analysis to provide evidence of the correctness ...

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