The New IS-LM Model: Language, Logic, and Limits
... One initial attempt at updating the IS-LM model was initiated in Sargent and Wallace (1975), who incorporated a version of the aggregate supply theory developed by Lucas (1972, 1973) in place of the Phillips curve or wage/price block. According to this rational expectations IS-LM model, systematic m ...
... One initial attempt at updating the IS-LM model was initiated in Sargent and Wallace (1975), who incorporated a version of the aggregate supply theory developed by Lucas (1972, 1973) in place of the Phillips curve or wage/price block. According to this rational expectations IS-LM model, systematic m ...
NBER WORKING PAPER SERIES OPTIMAL SIMPLE AND IMPLEMENTABLE MONETARY Stephanie Schmitt-Grohé
... with nominal rigidities.1 Most of these studies are conducted in the context of highly stylized theoretical and policy environments. For instance, in much of this body of work it is assumed that the government has access to a subsidy to factor inputs, financed with lump-sum taxes, aimed at dismantli ...
... with nominal rigidities.1 Most of these studies are conducted in the context of highly stylized theoretical and policy environments. For instance, in much of this body of work it is assumed that the government has access to a subsidy to factor inputs, financed with lump-sum taxes, aimed at dismantli ...
Secular Stagnation: the History of a Macroeconomic Heresy
... According to historian Frederick Jackson Turner, this short piece of bureaucratic prose marked a historic moment in American society. Up to that point the history of the United States had been dominated by its Westward expansion. “The existence of an area of free land,” Jackson wrote, “its continuou ...
... According to historian Frederick Jackson Turner, this short piece of bureaucratic prose marked a historic moment in American society. Up to that point the history of the United States had been dominated by its Westward expansion. “The existence of an area of free land,” Jackson wrote, “its continuou ...
Fiscal Policy in the New Economic Consensus and Post Keynesian
... distortionary, inflationary and therefore useful mostly in extreme deflationary periods (see for example Krugman 2005). Blinder also opposes the “the case against discretionary fiscal policy,” but he explicitly does not advocate the “case for” fiscal policy. In fact, in normal times, Blinder support ...
... distortionary, inflationary and therefore useful mostly in extreme deflationary periods (see for example Krugman 2005). Blinder also opposes the “the case against discretionary fiscal policy,” but he explicitly does not advocate the “case for” fiscal policy. In fact, in normal times, Blinder support ...
The 3-Equation New Keynesian Model — a Graphical
... inflation in the Phillips curve could be the outcome of the imperfect availability of information or of institutional arrangements in a world where agents have rational expectations. For this reason, we prefer the more general term of inertial or backwards-looking Phillips curves since the key assu ...
... inflation in the Phillips curve could be the outcome of the imperfect availability of information or of institutional arrangements in a world where agents have rational expectations. For this reason, we prefer the more general term of inertial or backwards-looking Phillips curves since the key assu ...
Paper - University of Oxford, Department of Economics
... profoundly internationalist in his outlook, and was awarded the Nobel Memorial Prize in Economics in 1977, jointly with Bertil Ohlin, for The Theory of International Economic Policy (1951–5). But his contributions spanned the whole of the discipline. He made fundamental, and widely influential, cont ...
... profoundly internationalist in his outlook, and was awarded the Nobel Memorial Prize in Economics in 1977, jointly with Bertil Ohlin, for The Theory of International Economic Policy (1951–5). But his contributions spanned the whole of the discipline. He made fundamental, and widely influential, cont ...
- Blt2}L2tcu Abstract
... Employment - Quantity Theory of Money - Fisher's Equation of Exchange - Cash Balance Approach - Neutrality of Money - Money illusion - Pigou effect - Real Balance effect - Classical dichotomy - Concept of full employment - voluntary unemployment. Module 4: Keynesian Macro Economic Model Consumption ...
... Employment - Quantity Theory of Money - Fisher's Equation of Exchange - Cash Balance Approach - Neutrality of Money - Money illusion - Pigou effect - Real Balance effect - Classical dichotomy - Concept of full employment - voluntary unemployment. Module 4: Keynesian Macro Economic Model Consumption ...
THE RETURN OF THE WAGE PHILLIPS CURVE
... and t is a lump-sum component of income (which may include, among other items, dividends from ownership of firms). The above sequence of period budget constraints is supplemented with a solvency condition which prevents the household from engaging in Ponzi schemes. As in EHL, and following the form ...
... and t is a lump-sum component of income (which may include, among other items, dividends from ownership of firms). The above sequence of period budget constraints is supplemented with a solvency condition which prevents the household from engaging in Ponzi schemes. As in EHL, and following the form ...
The relevance of Keynes - Dr. Robert E. Looney Homepage
... it enlarges the scope for speculation and thus makes economic life more volatile. This has been exactly the effect of ‘securitisation’ in the last few years. However, the story is only half told. Investment depends on what Keynes calls the marginal efficiency of capital (MEC)—roughly, the expected r ...
... it enlarges the scope for speculation and thus makes economic life more volatile. This has been exactly the effect of ‘securitisation’ in the last few years. However, the story is only half told. Investment depends on what Keynes calls the marginal efficiency of capital (MEC)—roughly, the expected r ...
Unemployment - Contemporary Issues in Economy
... sary condition of the practical issues, and therefore, this paper will generally consider the theoretical aspect of involuntary unemployment (Walras, 2005, p. 53). It will be shown that the kind of unemployment depends on the character of the original aggregate supply curve of labour. On the one han ...
... sary condition of the practical issues, and therefore, this paper will generally consider the theoretical aspect of involuntary unemployment (Walras, 2005, p. 53). It will be shown that the kind of unemployment depends on the character of the original aggregate supply curve of labour. On the one han ...
DPEco2.3.4 Low and Stable Rates of Inflation DPEco2.3.4 The
... value of the currency. 3. Supply side economic policies: Supply side policies include those that seek to increase productivity, competition and innovation – all of which can maintain lower prices. These are important ways of controlling inflation in the medium term. In the long run, it is the growth ...
... value of the currency. 3. Supply side economic policies: Supply side policies include those that seek to increase productivity, competition and innovation – all of which can maintain lower prices. These are important ways of controlling inflation in the medium term. In the long run, it is the growth ...
Optimal Forward Guidance in Monetary Policy: Can Central Banks
... value, or set of values, instead of a rule, making it easier to deceive the public. For example, it is easier to verify that 5% inflation misses the established 2-3% target, than determining if a realized rate of 5% means that a previously projection of 3% was biased or misleading. The latter is par ...
... value, or set of values, instead of a rule, making it easier to deceive the public. For example, it is easier to verify that 5% inflation misses the established 2-3% target, than determining if a realized rate of 5% means that a previously projection of 3% was biased or misleading. The latter is par ...
Inflation and Unemployment: The Phillips Curve
... Distinguish between inflation and a one-time rise in the price level Explain how demand-pull inflation is generated Explain how cost-push inflation is generated Describe the effects of inflation Explain the short-run and long-run relationships between inflation and unemployment Explain t ...
... Distinguish between inflation and a one-time rise in the price level Explain how demand-pull inflation is generated Explain how cost-push inflation is generated Describe the effects of inflation Explain the short-run and long-run relationships between inflation and unemployment Explain t ...
Inflation During and After the Zero Lower Bound
... component, which remains positive in the U.S. and the Euro Area throughout the sample, but has been negative in Japan since the late 1990s. Looking into the future, the time series model predicts a substantial probability of deflation for Japan over the next five years, while for the U.S. and Europe ...
... component, which remains positive in the U.S. and the Euro Area throughout the sample, but has been negative in Japan since the late 1990s. Looking into the future, the time series model predicts a substantial probability of deflation for Japan over the next five years, while for the U.S. and Europe ...
Document
... Higher than anticipated inflation lowers the real wage rate and employers gain at the expense of workers. Lower than anticipated inflation raises the real wage rate and workers gain at the expense of employers. Higher than anticipated inflation lowers the real wage rate, increases the quantity of la ...
... Higher than anticipated inflation lowers the real wage rate and employers gain at the expense of workers. Lower than anticipated inflation raises the real wage rate and workers gain at the expense of employers. Higher than anticipated inflation lowers the real wage rate, increases the quantity of la ...
"Great Inflation" Lessons for Monetary Policy
... Chairman Martin remarked that “since mid 1965, except for a brief respite in early 1967, we have had an overheated economy, and growing expectations of inflation. [...] It is clear that inflation, and the widespread expectation of it, is our most serious current economic problem.”8 And in May 1970, ...
... Chairman Martin remarked that “since mid 1965, except for a brief respite in early 1967, we have had an overheated economy, and growing expectations of inflation. [...] It is clear that inflation, and the widespread expectation of it, is our most serious current economic problem.”8 And in May 1970, ...
Chapter 20 Explaining Business Cycles: Aggregate Supply and
... business fluctuations. The propagation mechanism reflects the structure of the economy and determines the manner in which it reacts to shocks and how long it takes for it to adjust to a shock. Ragnar Frisch stressed that even though shocks to the economy may follow an unsystematic pattern, the struc ...
... business fluctuations. The propagation mechanism reflects the structure of the economy and determines the manner in which it reacts to shocks and how long it takes for it to adjust to a shock. Ragnar Frisch stressed that even though shocks to the economy may follow an unsystematic pattern, the struc ...
Lucas on the Relationship between Theory and Ideology
... “Methods and Problems in Business Cycle Theory” ([1980a] 1981a) comes closest to such an enterprise — it should be noted that about half the essays in his book, Studies in Business Cycle Theory, are of a methodological nature. The above account is drawn mainly from them. Note also that, with a few e ...
... “Methods and Problems in Business Cycle Theory” ([1980a] 1981a) comes closest to such an enterprise — it should be noted that about half the essays in his book, Studies in Business Cycle Theory, are of a methodological nature. The above account is drawn mainly from them. Note also that, with a few e ...
Edmund Phelps
Edmund Strother Phelps, Jr. (born July 26, 1933) is an American economist and the winner of the 2006 Nobel Memorial Prize in Economic Sciences. Early in his career he became renowned for his research at Yale's Cowles Foundation in the first half of the 1960s on the sources of economic growth. His demonstration of the Golden Rule savings rate, a concept first devised by John von Neumann and Maurice Allais, started a wave of research on how much a nation ought to spend on present consumption rather than save and invest for future generations. His most seminal work inserted a microfoundation—one featuring imperfect information, incomplete knowledge and expectations about wages and prices—to support a macroeconomic theory of employment determination and price-wage dynamics. This led to his development of the natural rate of unemployment—its existence and the mechanism governing its size.Phelps has been McVickar Professor of Political Economy at Columbia University since 1982. He is also the director of Columbia's Center on Capitalism and Society.