One of the stranger spectacles of mainstream macro is the inability to agree on what should be obvious -- will inflation rise or fall if the central bank raises the (nominal) interest rate? If it were possible to cleanly find the solutions for Dynamic Stochastic General Equilibrium (DSGE) models, this could easily be determined by applying a level shift to a sensible central bank reaction function (such as a Taylor Rule).If this can't be decided empirically in a compelling way using the operative models, the entire debate is pretty clearly bonkers.
(As many of my readers are post-Keynesian, I will note that this article follows the convention of mainstream economics, and ignore the insights of post-Keynesian analysis. As a result, I am just writing here about the analysis of DSGE models, and not how economies in the real world might operate.)
Ending The "Neo-Fisherian" Debate