Time Inconsistency and the Exchange Rate Channel of
... Central to this literature is the ‘‘New Keynesian Phillips curve’’, which states that current inflation depends on the output gap (or some other measure of marginal costs) and expected future inflation. The New Keynesian Phillips curve is clearly attractive on theoretical grounds, since it can be de ...
... Central to this literature is the ‘‘New Keynesian Phillips curve’’, which states that current inflation depends on the output gap (or some other measure of marginal costs) and expected future inflation. The New Keynesian Phillips curve is clearly attractive on theoretical grounds, since it can be de ...
Econ 375 Problem Set 3 Key 1. This one is straight out of the book. 2
... not to extend rent control. That way, many tenants gain while a few landlords lose. The problem is that builders might expect the city to renege on its promise; as a result, they may not build new buildings. 15. The Lucas critique argues that economic policy based on econometric forecasting models i ...
... not to extend rent control. That way, many tenants gain while a few landlords lose. The problem is that builders might expect the city to renege on its promise; as a result, they may not build new buildings. 15. The Lucas critique argues that economic policy based on econometric forecasting models i ...
Еconomic theory and the New-Keynesian school
... inflationary expectations. This is considered one of neutralities (has 5 neutralities)9 of the new macroeconomics, which results in more constraints on monetary and fiscal policy to affect output and unemployment (Akerlof, 2005)10.The natural rate of unemployment NAIRU (Non-Accelerating-InflationRat ...
... inflationary expectations. This is considered one of neutralities (has 5 neutralities)9 of the new macroeconomics, which results in more constraints on monetary and fiscal policy to affect output and unemployment (Akerlof, 2005)10.The natural rate of unemployment NAIRU (Non-Accelerating-InflationRat ...
New Keynesian and New Classical Approaches to Fiscal Policy
... forward looking and a world in which wages and prices can adjust freely to clear markets. One of two things happens. Either the government spending increases aggregate demand and prices undo the effect or the government tries to shift aggregate demand outward and people undo the effect by saving in ...
... forward looking and a world in which wages and prices can adjust freely to clear markets. One of two things happens. Either the government spending increases aggregate demand and prices undo the effect or the government tries to shift aggregate demand outward and people undo the effect by saving in ...
APS6
... than labor productivity increases, then there is cost push inflation, i.e., a shift "in" and to the left for the SR-AS curve, but it would not be as “bad” as if only wages rose. On the other hand, if the wage increase is equal to or smaller than the rise in labor productivity, you would not observe ...
... than labor productivity increases, then there is cost push inflation, i.e., a shift "in" and to the left for the SR-AS curve, but it would not be as “bad” as if only wages rose. On the other hand, if the wage increase is equal to or smaller than the rise in labor productivity, you would not observe ...
Discussion - Reserve Bank of Australia
... comments I will draw on my own general equilibrium modelling to illustrate two key issues that both papers treat insufficiently and which require further research. The first is to directly address the question: if macroeconomic shocks are responsible for increasing unemployment in Australia, is the ...
... comments I will draw on my own general equilibrium modelling to illustrate two key issues that both papers treat insufficiently and which require further research. The first is to directly address the question: if macroeconomic shocks are responsible for increasing unemployment in Australia, is the ...
A NeoWicksellian in a New Classical World
... diversions with respect to money. My money is, so to speak, where my mouth is: My own textbook-in-progress is also based around an IS/interest-rate rule/AS model, in which financial markets cleared by price rather than the LM curve are emphasized.1 Such an approach, as Woodford notes, has become sta ...
... diversions with respect to money. My money is, so to speak, where my mouth is: My own textbook-in-progress is also based around an IS/interest-rate rule/AS model, in which financial markets cleared by price rather than the LM curve are emphasized.1 Such an approach, as Woodford notes, has become sta ...
Government Spending in a Growing Economy
... Three major implications for the scope and effects of macroeconomic policy can be derived from analysis based on the CGC model. First, a fixation on arbitrarily restrictive fiscal targets will not necessarily yield any long-run benefits and, in fact, can lead to a collapse of demand over the course ...
... Three major implications for the scope and effects of macroeconomic policy can be derived from analysis based on the CGC model. First, a fixation on arbitrarily restrictive fiscal targets will not necessarily yield any long-run benefits and, in fact, can lead to a collapse of demand over the course ...
14.02 Principles of Macroeconomics Fall 2005 Quiz 2 Solutions
... 14.02 Principles of Macroeconomics Fall 2005 Quiz 2 Solutions Short Questions (30/100 points) Please state whether the following two statements are TRUE or FALSE with a short explanation (3 or 4 lines). Each question counts 6/100 points. 1. The arbitrage law holds comparing nominal returns, but it d ...
... 14.02 Principles of Macroeconomics Fall 2005 Quiz 2 Solutions Short Questions (30/100 points) Please state whether the following two statements are TRUE or FALSE with a short explanation (3 or 4 lines). Each question counts 6/100 points. 1. The arbitrage law holds comparing nominal returns, but it d ...
The retreat from Keynesian economics
... until recently a small and insignificant minority with little or no influence on policy development. Keynesian economics became the common language of policy analysis. It was therefore noteworthy but not surprising when President Nixon expressed the consensus by declaring, "We are all Keynesians now ...
... until recently a small and insignificant minority with little or no influence on policy development. Keynesian economics became the common language of policy analysis. It was therefore noteworthy but not surprising when President Nixon expressed the consensus by declaring, "We are all Keynesians now ...
14.02 Principles of Macroeconomics
... 1. Monetary policy is neutral in the medium run, but fiscal policy is not. True. In the medium run changes in the money supply affect only the price level. Changes in fiscal policy affect the composition of aggregate demand through changes in the real interest rate. 2. The aggregate supply relation ...
... 1. Monetary policy is neutral in the medium run, but fiscal policy is not. True. In the medium run changes in the money supply affect only the price level. Changes in fiscal policy affect the composition of aggregate demand through changes in the real interest rate. 2. The aggregate supply relation ...
ECON 10020/20020 Principles of Macroeconomics
... the ten cents . . . ”. Is there a potential economic (logical) fallacy in this statement? If so, identify the economic fallacy and briefly explain why the commentator’s statement can be classified as the logical fallacy you identified. • The person making the statement seems to imply they know what ...
... the ten cents . . . ”. Is there a potential economic (logical) fallacy in this statement? If so, identify the economic fallacy and briefly explain why the commentator’s statement can be classified as the logical fallacy you identified. • The person making the statement seems to imply they know what ...
Chapter 15 Macro Stabilization Policy
... A) Nonactivism means that no government policy is pursued to smooth the fluctuations of the business cycle; instead, the economy’s self-correcting mechanism is relied upon to drive the economy back to the natural level of output. B) Nonactivists suggest the government follow two fixed rules. 1. The ...
... A) Nonactivism means that no government policy is pursued to smooth the fluctuations of the business cycle; instead, the economy’s self-correcting mechanism is relied upon to drive the economy back to the natural level of output. B) Nonactivists suggest the government follow two fixed rules. 1. The ...
Chapter 14-Unemployment vs Inflation
... (used during the Johnson administration) or price and wage controls (used during WW II and the Nixon administration). Controls have not been very effective because of expectations and because they are contrary to freedom. Price controls are more common in other countries than the United States. Exce ...
... (used during the Johnson administration) or price and wage controls (used during WW II and the Nixon administration). Controls have not been very effective because of expectations and because they are contrary to freedom. Price controls are more common in other countries than the United States. Exce ...
Chapter 16
... contribution to economic well being. 2. From 1990 to 2000, the growth rate of real GDP per person was 2 percent a year, at which rate output per person doubles every 35 years. If it grew at 2.5 percent a year, doubling would take only 28 years; 4 ...
... contribution to economic well being. 2. From 1990 to 2000, the growth rate of real GDP per person was 2 percent a year, at which rate output per person doubles every 35 years. If it grew at 2.5 percent a year, doubling would take only 28 years; 4 ...
Document
... b. evidence has shown that recessions have never been policy induced but have instead been caused by misguided government policy c. most economists now admit that wages are completely flexible and that markets always clear immediately d. many modern economists agree that macroeconomic models need to ...
... b. evidence has shown that recessions have never been policy induced but have instead been caused by misguided government policy c. most economists now admit that wages are completely flexible and that markets always clear immediately d. many modern economists agree that macroeconomic models need to ...
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.