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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“All the universe over, there is but one thing, this old Two- Face, creator-creature, mind-matter, right-wrong, of which any proposition may be affirmed or denied.”
—Ralph Waldo Emerson (1803–1882)