Monetary Policy in the New Neoclassical Synthesis: a Primer
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The Theory of Household Behavior: Some Foundations
This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Annals of Economic and Social Measurement, Volume 4, number 1 Volume Author/Editor: Sanford V. Berg, editor Volume Publisher: NBER Volume URL: http://www.nber.org/books/aesm75-1 Publication Date: 1975 Chapter Title: The Theory of Household Behavior: Some Foundations Chapter Author: Kelvin Lancaster Chapter URL: http://www.nber.org/chapters/c10216 Chapter pages in book: (p. 5 - 21) Annals a! E won;ic and Ss to!fea.t ure,twn t, 4 1975 THE THEORY OF IIOUSEIIOLI) BEHAVIOR: SOME FOUNDATIONS wt' K1LVIN LANCASTER* This paper is concerned with examining the common practice of considering the household to act us if it were a single individuaL Iconcludes rhut aggregate household behavior wifl diverge front the behavior of the typical individual in Iwo important respects, but that the degree of this divergence depend: on well-defined variables--the number of goods and characteristics in the consu;npf ion fecIJflolOgv relative to the size of the household, and thextent of joint consumption within the houseiwid. For appropriate values of these, the degree of divergence may be very small or zero. For some years now, it has been common to refer to the basic decision-making entity with respect to consumption as the "household" by those primarily con- cerned with data collection and analysis and those working mainly with macro- economic models, and as the "individua1' by those working in microeconomic theory and welfare economics. Although one-person households do exist, they are the exception rather than the rule, and the individual and the household cannot be taken to be identical. -
Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Zbaracki, Mark J.; Ritson, Mark; Levy, Daniel; Dutta, Shantanu; Bergen, Mark Article — Accepted Manuscript (Postprint) Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets Review of Economics and Statistics Suggested Citation: Zbaracki, Mark J.; Ritson, Mark; Levy, Daniel; Dutta, Shantanu; Bergen, Mark (2004) : Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets, Review of Economics and Statistics, ISSN 1530-9142, MIT Press, Cambridge, MA, Vol. 86, Iss. 2, pp. 514-533, http://dx.doi.org/10.1162/003465304323031085 , https://www.mitpressjournals.org/doi/abs/10.1162/003465304323031085?journalCode=rest This Version is available at: http://hdl.handle.net/10419/206841 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. -
1 John Stuart Mill Selections from on the Subjection of Women John
1 John Stuart Mill Selections from On the Subjection of Women John Stuart Mill (1806-1873) was an English philosopher, economist, and essayist. He was raised in strict accord with utilitarian principles by his economist father James Mill, the founder of utilitarian philosophy. John Stuart recorded his early training and subsequent near breakdown in in his Autobiography (“A Crisis in My Mental History. One Stage Onward”), published after his death by his step-daughter, Helen Taylor, in 1873. His strictly intellectual training led to an early crisis which, as he records in this chapter, was only relieved by reading the poetry of William Wordsworth. During his life, Mill published a number of works on economic and political issues, including the Principles of Political Economy (1848), Utilitarianism (1863), and On Liberty (1859). After his death, besides the Autobiography, his step-daughter published Three Essays on Religion in 1874. On the Subjection of Women (1869) is Mill’s utilitarian argument for the complete equality of women with men. Scholars think that it was greatly influenced by Mill’s discussions with Harriet Taylor, whom Mill married in 1851. The essay is addressed to men, the rulers and controllers of nineteenth-century society, and is his contribution to what had become known as “the woman question,” that is, what liberties should be accorded to women in society. As such, it is a clear and still-relevant contribution to the ongoing discussion of women’s rights and their desire to achieve what Mill announces in his opening thesis, “perfect equality.” Information readily available on the internet has not been glossed. -
Post-Keynesian Economics
History and Methods of Post- Keynesian Macroeconomics Marc Lavoie University of Ottawa Outline • 1A. We set post-Keynesian economics within a set of multiple heterodox schools of thought, in opposition to mainstream schools. • 1B. We identify the main features (presuppositions) of heterodoxy, contrasting them to those of orthodoxy. • 2. We go over a brief history of post-Keynesian economics, in particular its founding institutional moments. • 3. We identify the additional features that characterize post- Keynesian economics relative to closely-related heterodox schools. • 4. We delineate the various streams of post-Keynesian economics: Fundamentalism, Kaleckian, Kaldorian, Sraffian, Institutionalist. • 5. We discuss the evolution of post-Keynesian economics, and some of its important works over the last 40 years. • 6. We mention some of the debates that have rocked post- Keynesian economics. PART I Heterodox schools Heterodox vs Orthodox economics •NON-ORTHODOX • ORTHODOX PARADIGM PARADIGM • DOMINANT PARADIGM • HETERODOX PARADIGM • THE MAINSTREAM • POST-CLASSICAL PARADIGM • NEOCLASSICAL ECONOMICS • RADICAL POLITICAL ECONOMY • REVIVAL OF POLITICAL ECONOMY Macro- economics Heterodox Neoclassical authors KEYNES school Cambridge Old Marxists Monetarists Keynesians Keynesians Radicals French Post- New New Regulation Keynesians Keynesians Classicals School Orthodox vs Heterodox economics • Post-Keynesian economics is one of many different heterodox schools of economics. • Heterodox economists are dissenters in economics. • Dissent is a broader -
The Neoclassical Synthesis
Department of Economics- FEA/USP In Search of Lost Time: The Neoclassical Synthesis MICHEL DE VROEY PEDRO GARCIA DUARTE WORKING PAPER SERIES Nº 2012-07 DEPARTMENT OF ECONOMICS, FEA-USP WORKING PAPER Nº 2012-07 In Search of Lost Time: The Neoclassical Synthesis Michel De Vroey ([email protected]) Pedro Garcia Duarte ([email protected]) Abstract: Present day macroeconomics has been sometimes dubbed as the new neoclassical synthesis, suggesting that it constitutes a reincarnation of the neoclassical synthesis of the 1950s. This has prompted us to examine the contents of the ‘old’ and the ‘new’ neoclassical syntheses. Our main conclusion is that the latter bears little resemblance with the former. Additionally, we make three points: (a) from its origins with Paul Samuelson onward the neoclassical synthesis notion had no fixed content and we bring out four main distinct meanings; (b) its most cogent interpretation, defended e.g. by Solow and Mankiw, is a plea for a pluralistic macroeconomics, wherein short-period market non-clearing models would live side by side with long-period market-clearing models; (c) a distinction should be drawn between first and second generation new Keynesian economists as the former defend the old neoclassical synthesis while the latter, with their DSGE models, adhere to the Lucasian view that macroeconomics should be based on a single baseline model. Keywords: neoclassical synthesis; new neoclassical synthesis; DSGE models; Paul Samuelson; Robert Lucas JEL Codes: B22; B30; E12; E13 1 IN SEARCH OF LOST TIME: THE NEOCLASSICAL SYNTHESIS Michel De Vroey1 and Pedro Garcia Duarte2 Introduction Since its inception, macroeconomics has witnessed an alternation between phases of consensus and dissent. -
Household Income and Wealth
HOUSEHOLD INCOME AND WEALTH INCOME AND SAVINGS NATIONAL INCOME PER CAPITA HOUSEHOLD DISPOSABLE INCOME HOUSEHOLD SAVINGS INCOME INEQUALITY AND POVERTY INCOME INEQUALITY POVERTY RATES AND GAPS HOUSEHOLD WEALTH HOUSEHOLD FINANCIAL ASSETS HOUSEHOLD DEBT NON-FINANCIAL ASSETS BY HOUSEHOLDS HOUSEHOLD INCOME AND WEALTH • INCOME AND SAVINGS NATIONAL INCOME PER CAPITA While per capita gross domestic product is the indicator property income may never actually be returned to the most commonly used to compare income levels, two country but instead add to foreign direct investment. other measures are preferred, at least in theory, by many analysts. These are per capita Gross National Income Comparability (GNI) and Net National Income (NNI). Whereas GDP refers All countries compile data according to the 1993 SNA to the income generated by production activities on the “System of National Accounts, 1993” with the exception economic territory of the country, GNI measures the of Australia where data are compiled according to the income generated by the residents of a country, whether new 2008 SNA. It’s important to note however that earned on the domestic territory or abroad. differences between the 2008 SNA and the 1993 SNA do not have a significant impact of the comparability of the Definition indicators presented here and this implies that data are GNI is defined as GDP plus receipts from abroad less highly comparable across countries. payments to abroad of wages and salaries and of However, there are practical difficulties in the property income plus net taxes and subsidies receivable measurement both of international flows of wages and from abroad. NNI is equal to GNI net of depreciation. -
Happiness, Contentment and Other Emotions for Central Banks
NBER WORKING PAPER SERIES HAPPINESS, CONTENTMENT AND OTHER EMOTIONS FOR CENTRAL BANKS Rafael Di Tella Robert MacCulloch Working Paper 13622 http://www.nber.org/papers/w13622 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 November 2007 This paper was prepared for the Federal Reserve Bank of Boston, “Implications of Behavioral Economics for Economic Policy” conference, September 27-28th, 2007. For very helpful comments and discussions, we thank our commentators, Greg Mankiw and Alan Krueger, as well as conference participants, Huw Pill, John Helliwell, Sebastian Galiani, Rawi Abdelal, and Julio Rotemberg. We thank Jorge Albanesi for excellent research assistance. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. © 2007 by Rafael Di Tella and Robert MacCulloch. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Happiness, Contentment and Other Emotions for Central Banks Rafael Di Tella and Robert MacCulloch NBER Working Paper No. 13622 November 2007 JEL No. E0,E58,H0 ABSTRACT We show that data on satisfaction with life from over 600,000 Europeans are negatively correlated with the unemployment rate and the inflation rate. Our preferred interpretation is that this shows that emotions are affected by macroeconomic fluctuations. Contentment is, at a minimum, one of the important emotions that central banks should focus on. More ambitiously, contentment might be considered one of the components of utility. The results may help central banks understand the tradeoffs that the public is willing to accept in terms of unemployment for inflation, at least in terms of keeping the average level of one particular emotion (contentment) constant. -
Unemployment Did Not Rise During the Great Depression—Rather, People Took Long Vacations
Working Paper No. 652 The Dismal State of Macroeconomics and the Opportunity for a New Beginning by L. Randall Wray Levy Economics Institute of Bard College March 2011 The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 http://www.levyinstitute.org Copyright © Levy Economics Institute 2011 All rights reserved ABSTRACT The Queen of England famously asked her economic advisers why none of them had seen “it” (the global financial crisis) coming. Obviously, the answer is complex, but it must include reference to the evolution of macroeconomic theory over the postwar period— from the “Age of Keynes,” through the Friedmanian era and the return of Neoclassical economics in a particularly extreme form, and, finally, on to the New Monetary Consensus, with a new version of fine-tuning. The story cannot leave out the parallel developments in finance theory—with its efficient markets hypothesis—and in approaches to regulation and supervision of financial institutions. This paper critically examines these developments and returns to the earlier Keynesian tradition to see what was left out of postwar macro. -
References Amato, Jeffrey V., and Hyun Song Shin, 2003
- 25 - References Amato, Jeffrey V., and Hyun Song Shin, 2003, “Public and private information in monetary policy models” BIS Working Papers, forthcoming (Basel: Bank of International Settlements). Ball, Laurence, 2000, “Near-Rationality and Inflation in Two Monetary Regimes,” NBER Working Paper 7988 (Cambridge, Mass.: National Bureau of Economic Research). ———, 1995, “Disinflation and Imperfect Credibility,” Journal of Monetary Economics, Vol. 35, pp. 5–24. Barro, Robert, and David Gordon, 1983, “Rules, Discretion, and Reputation in a Model of Monetary Policy,” Journal of Monetary Economics, Vol. 12, pp. 101–21. Bayoumi, Tamim, and Silvia Sgherri, 2003, “Deconstructing the Art of Central Banking,” forthcoming IMF Working Paper (Washington: International Monetary Fund). Blanchard, Olivier, and John Simon, 2001, “The Long and Large Decline in U.S. Output Volatility,” Brookings Papers on Economic Activity I, pp. 135–64. (Washington: Brookings Institution). Boivin, Jean, and Marc Giannoni, 2002, “Assessing Changes in the Monetary Transmission Mechanism: A VAR Approach”, Federal Reserve Bank of New York Economic Policy Review, Vol 8, pp. 97-111. Buiter, W., and Jewitt, I., 1989, “Staggered Wage Setting and Relative Wage Rigidities: Variations on a Theme of Taylor,” Reprinted in: Macroeconomic Theory and Stabilization Policy, edited by W. Buiter (University of Michigan Press, Ann Arbor), pp. 183–99. Calvo, Guillermo A., 1983, “Staggered Prices in a Utility Maximizing Framework,” Journal of Monetary Economics, Vol. 12, pp. 383–88. Christiano, Lawrence J., and Cristopher Gust, 2000, “The Expectations Trap Hypothesis,” Federal Reserve Bank of Chicago Economic Perspectives, Vol. 24, pp. 21–39. Clarida, Richard, Jordi Galí, and Mark Gertler, 1998, “Monetary Policy Rules In Practice: Some International Evidence,” European Economic Review, pp. -
Firm Debt Deflation, Household Precautionary Savings, and the Amplification of Aggregate Shocks*
Firm Debt Deflation, Household Precautionary Savings, and the Amplification of Aggregate Shocks Andrea Caggese Angelo Gutierrez Ander Pérez-Orive Universitat Pompeu Fabra, Universitat Pompeu Fabra Federal Reserve Board CREI & Barcelona GSE [PRELIMINARY AND INCOMPLETE] (This Version: February 2019) Abstract Deleveraging shocks that increase household precautionary savings, and financial and uncertainty shocks to firms, interact and amplify each other, even when these same shocks separately have moderate effects on output and employment. This result is obtained in a model in which heterogeneous households face financial frictions and unemployment risk and in which heterogeneous firms borrow funds using nominally fixed long-term debt and face costly bankruptcy. This novel amplification mechanism is based on a dynamic feedback between the precautionary behavior of households and the bankruptcy and entry decisions of firms. Our results support the view that firm financial frictions are important to understand the effect of household deleveraging on unemployment, consistent with recent empirical studies examining the 2007-2009 Great Recession. Keywords: Financial Shocks, Amplification, Precautionary Savings, Unemployment Risk, Borrowing Constraints, Firm Bankruptcy Risk JEL Classification: E21, E24, G33 * A previous version of this paper circulated with the title "The Interaction between Household and Firm Dynamics and the Amplification of Financial Shocks". We thank Chris Carroll, Wouter den Haan, Simon Gilchrist, Joao Gomes (discussant), Bob Hall, Juan Jimeno -
The Essential JOHN STUART MILL the Essential DAVID HUME
The Essential JOHN STUART MILL The Essential DAVID HUME DAVID The Essential by Sandra J. Peart Copyright © 2021 by the Fraser Institute. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. The author of this publication has worked independently and opinions expressed by him are, therefore, his own, and do not necessarily reflect the opinions of the Fraser Institute or its supporters, directors, or staff. This publication in no way implies that the Fraser Institute, its directors, or staff are in favour of, or oppose the passage of, any bill; or that they support or oppose any particular political party or candidate. Printed and bound in Canada Cover design and artwork Bill C. Ray ISBN 978-0-88975-616-8 Contents Introduction: Who Was John Stuart Mill? / 1 1. Liberty: Why, for Whom, and How Much? / 9 2. Freedom of Expression: Learning, Bias, and Tolerance / 21 3. Utilitarianism: Happiness, Pleasure, and Public Policy / 31 4. Mill’s Feminism: Marriage, Property, and the Labour Market / 41 5. Production and Distribution / 49 6. Mill on Property / 59 7. Mill on Socialism, Capitalism, and Competition / 71 8. Mill’s Considerations on Representative Government / 81 Concluding Thoughts: Lessons from Mill’s Radical Reformism / 91 Suggestions for Further Reading / 93 Publishing information / 99 About the author / 100 Publisher’s acknowledgments / 100 Supporting the Fraser Institute / 101 Purpose, funding, and independence / 101 About the Fraser Institute / 102 Editorial Advisory Board / 103 Fraser Institute d www.fraserinstitute.org Introduction: Who Was John Stuart Mill? I have thought that in an age in which education, and its improvement, are the subject of more, if not of profounder study than at any former period of English history, it may be useful that there should be some record of an education which was unusual and remarkable. -
What Changes Deflationary Expectations? Evidence from Japanese Household-Level Data
ESRI Discussion Paper Series No.65 What Changes Deflationary Expectations? Evidence from Japanese Household-level Data by Masahiro Hori and Satoshi Shimizutani October 2003 Economic and Social Research Institute Cabinet Office To kyo, Japan What Changes Deflationary Expectations? Evidence from Japanese Household-level Data1 by Masahiro Hori (Cabinet Office) and Satoshi Shimizutani (Economic and Social Research Institute, Cabinet Office)2 October 2003 1 This paper was prepared for the “International Workshop on Overcoming Deflation and Revitalizing the Japanese Economy” sponsored by the Economic and Social Research Institute. We’d like to thank David Weinstein, Fumio Hayashi, Koichi Hamada, Anil Kashyap, Yutaka Kosai and other participants at the conference as well as those at ESRI seminar for their useful comments. We would also like to express thanks to the Quality of Life Policy Bureau, especially Hitoshi Otose (Director of the Price Policy Division), Yoshio Kanda (formerly Price Policy Division) and Masaru Hadano (Price Policy Division) for providing us with micro-level data from the “Kokumin Seikatsu Monitors.” The views expressed in this paper are those of the authors and do not represent those of the Cabinet Office or the Japanese government. 2 Masahiro Hori, Cabinet Office; e-mail: [email protected]. Satoshi Shimizutani, Economic and Social Research Institute, Cabinet Office, e-mail: [email protected]. 1 Abstract The Japanese economy has suffered from deflation since the mid-1990s. Despite the importance of overcoming deflation for policymakers and academics in Japan, there has been no recent research on what changes deflationary expectations in Japan. This study emphasizes fact-finding from a unique and rich quarterly household-level data set to estimate average price expectations, to examine what changes price expectations, and to look at how changes in price expectations affect household consumption.