NBER WORKING PAPER SERIES DISCRETIONARY POLICY AND MULTIPLE EQUILIBRIA Robert G. King
... current choices that affect the evolution of state variables on the basis of beliefs about future policy, and (ii) future policymakers take these state variables as historically determined when choosing their optimal actions. Further, within the models of this large literature, there is typically a c ...
... current choices that affect the evolution of state variables on the basis of beliefs about future policy, and (ii) future policymakers take these state variables as historically determined when choosing their optimal actions. Further, within the models of this large literature, there is typically a c ...
Company Name - University of Wisconsin–La Crosse
... Short-Run Versus Long-Run Effects of a Negative Demand Shock 2. …reduces the aggregate price level and aggregate output and leads to higher unemployment in the short run… ...
... Short-Run Versus Long-Run Effects of a Negative Demand Shock 2. …reduces the aggregate price level and aggregate output and leads to higher unemployment in the short run… ...
Learning from Prices: Amplification and Business Fluctuations
... We propose a new mechanism—based on learning from prices—that delivers expectationsdriven economic fluctuations without relying on any source of extrinsic noise. We show that when consumers learn from the prices of the goods they consume, higher prices can lead consumers to become unduly optimistic ...
... We propose a new mechanism—based on learning from prices—that delivers expectationsdriven economic fluctuations without relying on any source of extrinsic noise. We show that when consumers learn from the prices of the goods they consume, higher prices can lead consumers to become unduly optimistic ...
NBER WORKING PAPER SERIES COORDINATION, FAIR TREATMENT AND INFLATION PERSISTENCE Steinar Holden
... workers in the other group, and Djt is a dummy variable being one if Xjt < XJt and zero otherwise. The payoff is continuous in real and relative wages, and strictly increasing in the real wage. One would expect workers to prefer being paid more than others (α positive); however, for the sake of gene ...
... workers in the other group, and Djt is a dummy variable being one if Xjt < XJt and zero otherwise. The payoff is continuous in real and relative wages, and strictly increasing in the real wage. One would expect workers to prefer being paid more than others (α positive); however, for the sake of gene ...
Short-Run Macroeconomic Equilibrium
... aggregate supply curve and the aggregate demand curve is the point of short-run macroeconomic equilibrium. It determines the short-run equilibrium aggregate price level and the level of short-run equilibrium aggregate output. 2. Economic fluctuations occur because of a shift of the aggregate demand ...
... aggregate supply curve and the aggregate demand curve is the point of short-run macroeconomic equilibrium. It determines the short-run equilibrium aggregate price level and the level of short-run equilibrium aggregate output. 2. Economic fluctuations occur because of a shift of the aggregate demand ...
inboks ru
... universal (its fulfillment results in the fulfillment of the remaining equilibrium conditions) and invariant (its fulfillment at the micro level means achievement of macroeconomic equilibrium regardless of the way how macroeconomic equilibrium is defined). Third, Walras’ Law is specifically distingu ...
... universal (its fulfillment results in the fulfillment of the remaining equilibrium conditions) and invariant (its fulfillment at the micro level means achievement of macroeconomic equilibrium regardless of the way how macroeconomic equilibrium is defined). Third, Walras’ Law is specifically distingu ...
NBER WORKING PAPER SERIES RECENT DEVELOPMENTS IN MACROECONOMICS Working Paper No. 2473
... Drazen (1979) showed, using a representative family infinite horizon ...
... Drazen (1979) showed, using a representative family infinite horizon ...
Neoclassical Synthesis
... the level of unemployment, but it also made less urgent the need for better microeconomic underpinnings of market adjustment. Given the existence of a reliable empirical relation and the perceived difficulty of the theoretical task, it made good sense to work on other and more urgent topics, where th ...
... the level of unemployment, but it also made less urgent the need for better microeconomic underpinnings of market adjustment. Given the existence of a reliable empirical relation and the perceived difficulty of the theoretical task, it made good sense to work on other and more urgent topics, where th ...
Aggregate Demand/Aggregate Supply
... Prescott of Arizona State University, argued that Lucas was correct in assuming that workers and firms formed their expectations rationally and that wages and prices adjust quickly to supply and demand but wrong about the source of fluctuations in real GDP. ...
... Prescott of Arizona State University, argued that Lucas was correct in assuming that workers and firms formed their expectations rationally and that wages and prices adjust quickly to supply and demand but wrong about the source of fluctuations in real GDP. ...
Imperfect Competition and Macroeconomics: A Survey
... employed: prices adjust to equate demand and supply in each market. There are, however, many different types of imperfect competition, which can differ in fundamental respects, as has been seen in industrial organisation and the 'new' international trade theory. Thus we would expect the theory of im ...
... employed: prices adjust to equate demand and supply in each market. There are, however, many different types of imperfect competition, which can differ in fundamental respects, as has been seen in industrial organisation and the 'new' international trade theory. Thus we would expect the theory of im ...
Macroeconomic Equilibrium
... Economic growth occurs because the quantity of labor grows, capital is accumulated, and technology advances, all of which increase potential GDP and bring a rightward shift of the LAS curve. ...
... Economic growth occurs because the quantity of labor grows, capital is accumulated, and technology advances, all of which increase potential GDP and bring a rightward shift of the LAS curve. ...
Sticky Price Models, Durable Goods, and Real Wage
... review of the business cycle theory, Lucas (1981) argues that models relying on systematic real wage movements are doomed to failure. Ball and Romer (1990) show that real wage rigidities amplify the effects of nominal rigidities. Hall (2005) shows that real wage rigidities generate volatile unemploy ...
... review of the business cycle theory, Lucas (1981) argues that models relying on systematic real wage movements are doomed to failure. Ball and Romer (1990) show that real wage rigidities amplify the effects of nominal rigidities. Hall (2005) shows that real wage rigidities generate volatile unemploy ...
Figure 7-12 The Price Level - College of Business Administration
... wage rate must be reduced (at point C). Employers need to find some factor that will make workers willing to provide more work than shown by their labor supply curve. Otherwise we would never observe changes in employment over the business cycle. Labor contracts and wage bargaining Contracts e ...
... wage rate must be reduced (at point C). Employers need to find some factor that will make workers willing to provide more work than shown by their labor supply curve. Otherwise we would never observe changes in employment over the business cycle. Labor contracts and wage bargaining Contracts e ...
The General Theory After 80 Years
... market clearing with equilibrium, when market clearing is just one of many possible ways in which opposing forces might be in balance. Second, the profession emphasizes equilibrium and treats the price mechanism, the adjustment process, as simply an adjunct to equilibrium. Elementary texts dismiss t ...
... market clearing with equilibrium, when market clearing is just one of many possible ways in which opposing forces might be in balance. Second, the profession emphasizes equilibrium and treats the price mechanism, the adjustment process, as simply an adjunct to equilibrium. Elementary texts dismiss t ...
NBER WORKING PAPER SERIES DYNAMIC BEHAVIOR OF IMPERFECTLY COMPETITIVE ECONOMIES WITH MULTIPLE EQUILIBRIA
... commodities are produced by firms and the third is endowed to a group of agents termed outsiders. These outsiders have an aggregate endowment of 2M which is spent equally on each of the two produced goods. In what follows, variations in k ...
... commodities are produced by firms and the third is endowed to a group of agents termed outsiders. These outsiders have an aggregate endowment of 2M which is spent equally on each of the two produced goods. In what follows, variations in k ...
Imperfect Competition, Underemployment Equilibria and
... decisions and the labour supply choices of households (Section I). Each of these two features has important implications. By modelling saving behaviour explicitly within an overlapping generations framework, I can analyse the intertemporal effects of fiscal policy, without assuming that the governme ...
... decisions and the labour supply choices of households (Section I). Each of these two features has important implications. By modelling saving behaviour explicitly within an overlapping generations framework, I can analyse the intertemporal effects of fiscal policy, without assuming that the governme ...
what do we know about macroeconomics that
... money increased demand and output, and the increase in output in turn led to an increase in prices over time. Business Cycle Theory was not a theory at all, but rather a collection of explanations, each with its own rich dynamics.4 Most explanations focused on one factor at a time: real factors (wea ...
... money increased demand and output, and the increase in output in turn led to an increase in prices over time. Business Cycle Theory was not a theory at all, but rather a collection of explanations, each with its own rich dynamics.4 Most explanations focused on one factor at a time: real factors (wea ...
11 imperfect competition and real and nominal price rigidity
... competitive. Imperfect competition is necessary for models with price stickiness because perfectly competitive firms always charge the market equilibrium price, eliminating any possibility for rigidity. Sections 6.5 and 6.6 explore the microeconomic implications of nominal and real rigidities. Romer ...
... competitive. Imperfect competition is necessary for models with price stickiness because perfectly competitive firms always charge the market equilibrium price, eliminating any possibility for rigidity. Sections 6.5 and 6.6 explore the microeconomic implications of nominal and real rigidities. Romer ...
long-run aggregate supply curve
... • The forces of short-run aggregate supply and aggregate demand meet at an equilibrium price level in an environment of incomplete adjustment of wages and prices. ...
... • The forces of short-run aggregate supply and aggregate demand meet at an equilibrium price level in an environment of incomplete adjustment of wages and prices. ...
NBER WORKING PAPER LIGHT OF THEORETICAL DEVELOPMENTS POLICY
... This critiquewaa indeed very powerful. The problem, however, is that equation (1') failed to explain inflationary developments in the 1970's and also failed as a policy tool for reasons that have very little to do with rational expectations revolution. The main fault was the mental switch from a wag ...
... This critiquewaa indeed very powerful. The problem, however, is that equation (1') failed to explain inflationary developments in the 1970's and also failed as a policy tool for reasons that have very little to do with rational expectations revolution. The main fault was the mental switch from a wag ...
estimation and identification of structural parameters in the presence
... There is now a plethora of examples of economies that exhibit multiple equilibria. These examples exist (even thrive) in almost all aspects of economics, including: studies of business cycles, growth theory, open economy macroeconomics, game theory, income distribution, industrial organization, labo ...
... There is now a plethora of examples of economies that exhibit multiple equilibria. These examples exist (even thrive) in almost all aspects of economics, including: studies of business cycles, growth theory, open economy macroeconomics, game theory, income distribution, industrial organization, labo ...
IS-LM
... 1. Suppose the economy begins in general equilibrium, but then the money supply is increased by 10% 2. This shifts the AD curve upward by 10% (from AD1 to AD2) because to maintain the aggregate quantity demanded at a given level, the price level would have to rise by 10% so that real money supply wo ...
... 1. Suppose the economy begins in general equilibrium, but then the money supply is increased by 10% 2. This shifts the AD curve upward by 10% (from AD1 to AD2) because to maintain the aggregate quantity demanded at a given level, the price level would have to rise by 10% so that real money supply wo ...
ICT5 - Radhamadhab College
... Partial equilibrium, which only analyzes single markets. As with all models, this is an abstraction from a real economy; it is proposed as being a useful model, both by considering equilibrium prices as long-term prices and by considering actual prices as deviations from equilibrium. ...
... Partial equilibrium, which only analyzes single markets. As with all models, this is an abstraction from a real economy; it is proposed as being a useful model, both by considering equilibrium prices as long-term prices and by considering actual prices as deviations from equilibrium. ...
esp01-molana 221832 en
... For example, price-setting firms could use rising unemployment as device to deter shirking. In this setting, macroeconomic policy interventions can produce unexpected consequences. For example, as Lindbeck (1992) points out: "In the context of a nonmarket-clearing labour market, it is certainly reas ...
... For example, price-setting firms could use rising unemployment as device to deter shirking. In this setting, macroeconomic policy interventions can produce unexpected consequences. For example, as Lindbeck (1992) points out: "In the context of a nonmarket-clearing labour market, it is certainly reas ...
