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 ...
The Relationship between Output and Unemployment with Efficiency Wages
... unemployment rate are negatively related, occurs in the ‘high-effort’ state where the economy can be said to be operating ‘efficiently’. In this case, to raise the level of output in response to a rise in aggregate demand firms need to employ more workers. The opposite case occurs in the ‘low-effort ...
... unemployment rate are negatively related, occurs in the ‘high-effort’ state where the economy can be said to be operating ‘efficiently’. In this case, to raise the level of output in response to a rise in aggregate demand firms need to employ more workers. The opposite case occurs in the ‘low-effort ...
NBER WORKING PAPER SERIES OPTIMAL MONETARY GROWTH WITH ACCOMODATING FISCAL POLICY
... involves a Phelps-type tradeoff between the income tax rate and the inflation tax rate. The framework is suited for analyzing optimal macroeconomic policy in general and the latter part of the paper considers an optimal monetary-fiscal package. ...
... involves a Phelps-type tradeoff between the income tax rate and the inflation tax rate. The framework is suited for analyzing optimal macroeconomic policy in general and the latter part of the paper considers an optimal monetary-fiscal package. ...
Keynes`s General Theory critique of the neoclassical theories of
... The completeness of the Ricardian victory must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual presti ...
... The completeness of the Ricardian victory must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual presti ...
14.02 Principles of Macroeconomics Problem Set 3 Fall 2005 ***Solution***
... 6) Assume that the medium run equilibrium you calculated in part 3) is perturbed by a shock that dramatically increases µ by 1.3, to a value of 1.6. Calculate the new medium run equilibrium. How can the government and the central bank restore the pre-shock medium run equilibrium you calculated in p ...
... 6) Assume that the medium run equilibrium you calculated in part 3) is perturbed by a shock that dramatically increases µ by 1.3, to a value of 1.6. Calculate the new medium run equilibrium. How can the government and the central bank restore the pre-shock medium run equilibrium you calculated in p ...
13 TIME INCONSISTENCY IN MONETARY POLICY
... advanced economies, where the issuance of money does not play a significant role in government revenues, the main reason is the existence of a compromise between unemployment and inflation. If a policymaker believes that he is able to influence real income by movements in aggregate demand, then an e ...
... advanced economies, where the issuance of money does not play a significant role in government revenues, the main reason is the existence of a compromise between unemployment and inflation. If a policymaker believes that he is able to influence real income by movements in aggregate demand, then an e ...
Are the Effects of Monetary Policy Asymmetric?
... but rather its size.3 And still other studies find evidence that the impact of monetary policy depends chiefly on the state of the economy.4 One problem facing economists trying to find evidence of asymmetry is that the standard models used for measuring the effects of shocks, such as changes in mon ...
... but rather its size.3 And still other studies find evidence that the impact of monetary policy depends chiefly on the state of the economy.4 One problem facing economists trying to find evidence of asymmetry is that the standard models used for measuring the effects of shocks, such as changes in mon ...
Expectations, Deflation Traps and Macroeconomic Policy∗
... Paris, and at the San Francisco Federal Reserve Bank. We are particularly indebted for comments received from Jess Benhabib, David Cobham, Krisztina Molnar, John Williams, and Mike Woodford. ...
... Paris, and at the San Francisco Federal Reserve Bank. We are particularly indebted for comments received from Jess Benhabib, David Cobham, Krisztina Molnar, John Williams, and Mike Woodford. ...
The Study of Economics
... In addition, a variety of factors (such as minimum wages, unions, efficiency wages, and government policies designed to help laid-off workers) result in a situation in which there is a surplus of labor at the market wage rate, creating structural unemployment. As a result, the natural rate of unempl ...
... In addition, a variety of factors (such as minimum wages, unions, efficiency wages, and government policies designed to help laid-off workers) result in a situation in which there is a surplus of labor at the market wage rate, creating structural unemployment. As a result, the natural rate of unempl ...
CHAPTER 7 Wage and Price Adjustment: The Phillips Curve and
... A discussion of the old and new view of the Phillips curve serves to show students that economic theories undergo constant changes. Theories are adjusted as new evidence comes to light. Students should know that the idea of a permanent trade-off between inflation and unemployment must be wrong, sinc ...
... A discussion of the old and new view of the Phillips curve serves to show students that economic theories undergo constant changes. Theories are adjusted as new evidence comes to light. Students should know that the idea of a permanent trade-off between inflation and unemployment must be wrong, sinc ...
out-infl-dyn-partI
... simple; without it proper understanding is nearly impossible. In fact, making the AD curve dynamic makes understanding inflation/output dynamics so much easier that one could really say that it makes understanding inflation/output dynamics possible. It allows us to write out the period by period val ...
... simple; without it proper understanding is nearly impossible. In fact, making the AD curve dynamic makes understanding inflation/output dynamics so much easier that one could really say that it makes understanding inflation/output dynamics possible. It allows us to write out the period by period val ...
as a PDF
... Alesina and Perrotti (1995)3 separate between expansionary and non expansionary episodes and thereby identify asymmetries. The most important findings were that successful adjustments were characterized by expenditure cuts rather than tax increases and cuts in transfer payments and government wage e ...
... Alesina and Perrotti (1995)3 separate between expansionary and non expansionary episodes and thereby identify asymmetries. The most important findings were that successful adjustments were characterized by expenditure cuts rather than tax increases and cuts in transfer payments and government wage e ...
Modern Perspectives on Keynesian Stabilization Policies
... own perspective on the nature of recessions. It is clear that the well documented rigidity of nominal wages, together with the non-Walrasian nature of contractual relationships between workers and firms, may explain why real wages are so much higher than the marginal rate of substitution in downturn ...
... own perspective on the nature of recessions. It is clear that the well documented rigidity of nominal wages, together with the non-Walrasian nature of contractual relationships between workers and firms, may explain why real wages are so much higher than the marginal rate of substitution in downturn ...
Keynesian vs. monetarist/new classical view
... above market clearing levels. As long as wage rates responded to market forces and were flexible the labour force would adapt to wage changes. According to the predominant view, unemployment was ‘voluntary’ to the extent that labourers were not willing to accept jobs at the going wage rate. This vie ...
... above market clearing levels. As long as wage rates responded to market forces and were flexible the labour force would adapt to wage changes. According to the predominant view, unemployment was ‘voluntary’ to the extent that labourers were not willing to accept jobs at the going wage rate. This vie ...
Chapter 1
... (a) the high levels of unemployment that occurred during the Great Depression. (b) the presence of both high unemployment and high inflation during the 1970s. (c) the theoretical proof that Keynes’s ideas were invalid. (d) the evidence that Keynes’s ideas were useful during economic recessions, but ...
... (a) the high levels of unemployment that occurred during the Great Depression. (b) the presence of both high unemployment and high inflation during the 1970s. (c) the theoretical proof that Keynes’s ideas were invalid. (d) the evidence that Keynes’s ideas were useful during economic recessions, but ...
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.