The policy-ineffectiveness proposition (PIP) is a new classical theory proposed in 1976 by Thomas J. Sargent and Neil Wallace based upon the theory of rational expectations. It posited that monetary policy could not systematically manage the levels of output and employment in the economy.
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“The perfect God in his revelations of himself has never got to the length of one such proposition as you, his prophets, state.”
—Henry David Thoreau (1817–1862)