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... by a 5 percent increase in the prices of the goods they buy. Continued inflation becomes the normal state of affairs, and people “build it into” their daily decision-making process. For example, they expect the price of a car to be 5 percent higher next year. ...
... by a 5 percent increase in the prices of the goods they buy. Continued inflation becomes the normal state of affairs, and people “build it into” their daily decision-making process. For example, they expect the price of a car to be 5 percent higher next year. ...
NBER WORKING PAPER SERIES COORDINATION, FAIR TREATMENT AND INFLATION PERSISTENCE Steinar Holden
... In most existing price (or wage) setting models, while comparisons with other price setters are important to the individual price setter, these comparisons generate persistence in the level, but not the growth rate, of prices. We show that the existence of a range of equilibria opens up for a new ve ...
... In most existing price (or wage) setting models, while comparisons with other price setters are important to the individual price setter, these comparisons generate persistence in the level, but not the growth rate, of prices. We show that the existence of a range of equilibria opens up for a new ve ...
Macroeconomic Stabilization Policy in Canada
... Canadian monetary policy plays an important role in stabilizing the economy in response to demand and supply shocks. When there are shifts in demand, the direction of changes in our policy interest rate is quite clear. Suppose that the economy is operating at its production potential and that inflat ...
... Canadian monetary policy plays an important role in stabilizing the economy in response to demand and supply shocks. When there are shifts in demand, the direction of changes in our policy interest rate is quite clear. Suppose that the economy is operating at its production potential and that inflat ...
Is Full Employment Possible Under Globalization?
... suggest that it is immutable and unchangeable. On the contrary, many of the market characteristics that determine its level are man-made and policy-made. In the United States, for example, legal minimum wage rates … and the strength of labor unions all make the natural rate of unemployment higher th ...
... suggest that it is immutable and unchangeable. On the contrary, many of the market characteristics that determine its level are man-made and policy-made. In the United States, for example, legal minimum wage rates … and the strength of labor unions all make the natural rate of unemployment higher th ...
The Triumph of Monetarism
... Even those New Keynesians who dissent from some of these five propositions (I, for example, still cling to the belief—albeit without much supporting empirical evidence—that policy is as much gap-closing as stabilization policy) have a hard time denying that they structure how the New Keynesian wing ...
... Even those New Keynesians who dissent from some of these five propositions (I, for example, still cling to the belief—albeit without much supporting empirical evidence—that policy is as much gap-closing as stabilization policy) have a hard time denying that they structure how the New Keynesian wing ...
54k - Craig B. Hulet
... we, as you indicated, chosen wages as some indicator of monetary policy. That is not the case." (end quote) This is why many economists call this form of discourse Greenspanish! because he stated that wages, or as he puts it, more appropriately, increases in aggregate compensation per hour, are look ...
... we, as you indicated, chosen wages as some indicator of monetary policy. That is not the case." (end quote) This is why many economists call this form of discourse Greenspanish! because he stated that wages, or as he puts it, more appropriately, increases in aggregate compensation per hour, are look ...
Takatoshi Ito Working
... inherited from neoclassical grwoth theory, while the short-run rigidiry of prices and the minimum transaction rule of demand and supply in ...
... inherited from neoclassical grwoth theory, while the short-run rigidiry of prices and the minimum transaction rule of demand and supply in ...
NBER WORKING PAPER SERIES REAL BUSINESS CYCLES: A NEW KEYNESIAN PERSPECTIVE
... time. Once the inflexibility of wages and prices is admitted into a macroeconomic model, the classical dichotomy and the irrelevance of money quickly di sappear Much of the early work in the new classical revolution of the l970s attempted to destroy the classical dichotomy without ...
... time. Once the inflexibility of wages and prices is admitted into a macroeconomic model, the classical dichotomy and the irrelevance of money quickly di sappear Much of the early work in the new classical revolution of the l970s attempted to destroy the classical dichotomy without ...
Answers to Questions: Chapter 9
... represented by a move from Point E0 to Point D, is a mathematically possible outcome, but it is not consistent with firms’ profit-maximization. Firms would be willing to increase output to 106 only if the inflation rate were 3 percent, but that is not possible given nominal GDP growth of just 6 perc ...
... represented by a move from Point E0 to Point D, is a mathematically possible outcome, but it is not consistent with firms’ profit-maximization. Firms would be willing to increase output to 106 only if the inflation rate were 3 percent, but that is not possible given nominal GDP growth of just 6 perc ...
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... inconsistent except in very special cases. The behavior predicted by these models generally will not be observed when the government ...
... inconsistent except in very special cases. The behavior predicted by these models generally will not be observed when the government ...
Inflation, Disinflation, and Deflation
... looking forward to a decrease in the unemployment rate. Yet after six months of strong positive economic growth, the unemployment rate has fallen only slightly below what it was at the end of the recession. How can you explain why the unemployment rate did not fall as much although the economy was e ...
... looking forward to a decrease in the unemployment rate. Yet after six months of strong positive economic growth, the unemployment rate has fallen only slightly below what it was at the end of the recession. How can you explain why the unemployment rate did not fall as much although the economy was e ...
Fiscal Policy Effectiveness: Lessons from the Great Recession
... process and much of academic economic analysis. Instead, the goal of modern fiscal policy has largely been confined to stabilizing incomes, consumption, and investment, whereas employment stabilization is left to be determined as a byproduct of these policies. Keynes, by contrast, believed that the ...
... process and much of academic economic analysis. Instead, the goal of modern fiscal policy has largely been confined to stabilizing incomes, consumption, and investment, whereas employment stabilization is left to be determined as a byproduct of these policies. Keynes, by contrast, believed that the ...
Krugman on Keynes
... Keynes’s appreciation of the power of the reigning orthodoxy also explains the measured pace of his writing. “The composition of this book,” wrote Keynes in the preface, “has been for the author a long struggle of escape, and so must the reading of it be.” Step by step, Keynes set out to liberate e ...
... Keynes’s appreciation of the power of the reigning orthodoxy also explains the measured pace of his writing. “The composition of this book,” wrote Keynes in the preface, “has been for the author a long struggle of escape, and so must the reading of it be.” Step by step, Keynes set out to liberate 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.