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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“Whenever a man acts purposively, he acts under a belief in some experimental phenomenon. Consequently, the sum of the experimental phenomena that a proposition implies makes up its entire bearing upon human conduct.”
—Charles Sanders Peirce (1839–1914)