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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“A true proposition is a proposition belief which would never lead to such disappointment so long as the proposition is not understood otherwise than it was intended.”
—Charles Sanders Peirce (1839–1914)