COPYRIGHT NOTICE: Edited by Philippe Aghion, Roman Frydman, Joseph Stiglitz, and Michael Woodford: Knowledge, Information, and Expectations in Modern Macroeconomics: In Honor of Edmund S. Phelps is published by Princeton University Press and copyrighted, © 2003, by Princeton University Press. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher, except for reading and browsing via the World Wide Web. Users are not permitted to mount this file on any network servers.
Follow links for Class Use and other Permissions. For more information, send email to: [email protected] CONTENTS
Contributors ix
Edmund Phelps, Insider-Economists’ Insider 1 Paul A. Samuelson
Edmund S. Phelps and Modern Macroeconomics 3 Philippe Aghion, Roman Frydman, Joseph Stiglitz, and Michael Woodford
PART I Information, Wage-Price Dynamics, and Business Fluctuations
1 Imperfect Common Knowledge and the Effects of Monetary Policy 25 Michael Woodford
2 Comments on Woodford 59 Lars E. O. Svensson
3 Sticky Information: A Model of Monetary Nonneutrality and Structural Slumps 64 N. Gregory Mankiw and Ricardo Reis
4 A Theory of Rational Inflationary Inertia 87 Guillermo A. Calvo, Oya Celasun, and Michael Kumhof
5 Comments on Calvo, Celasun, and Kumhof 118 Mark Gertler
6 Macroeconomic Fluctuations in an Economy of Phelps-Winter Markets 123 Bruce Greenwald and Joseph Stiglitz
7 General Comments on Part I 137 Robert E. Lucas, Jr. vi CONTENTS
PART II Imperfect Knowledge, Expectations, and Rationality
8 Imperfect Knowledge Expectations, Uncertainty-Adjusted Uncovered Interest Rate Parity, and Exchange Rate Dynamics 145 Roman Frydman and Michael D. Goldberg
9 Comments on Frydman and Goldberg 183 David H. Papell
10 Endogenous Fluctuations and the Role of Monetary Policy 188 Mordecai Kurz with Hehui Jin and Maurizio Motolese
11 A Debt Puzzle 228 David Laibson, Andrea Repetto, and Jeremy Tobacman
12 Comments on Laibson, Repetto, and Tobacman 267 Robert A. Pollak
13 Reflections on Parts I and II 271 Edmund S. Phelps
PART III Determinants of Equilibrium Unemployment
14 How Monopsonistic Is the (Danish) Labor Market? 285 Dale T. Mortensen
15 Company Start-Up Costs and Employment 309 Christopher A. Pissarides
16 European Unemployment: From a Worker’s Perspective 326 Lars Ljungqvist and Thomas J. Sargent
17 Comments on Ljungqvist and Sargent 351 Olivier J. Blanchard
18 Flexibility and Job Creation: Lessons for Germany 357 James J. Heckman
19 The Beveridge Curve, Unemployment, and Wages in the OECD from the 1960s to the 1990s 394 Stephen Nickell, Luca Nunziata, Wolfgang Ochel, and Glenda Quintini
20 Comments on Nickell, Nunziata, Ochel, and Quintini 432 Jean-Paul Fitoussi CONTENTS vii
PART IV Education, Technical Change, and Growth
21 Wage Inequality and Technological Change: A Nelson-Phelps Approach 443 Philippe Aghion, Peter Howitt, and Gianluca Violante
22 Comments on Aghion, Howitt, and Violante 462 Robert E. Hall
23 Factor Prices and Technical Change: From Induced Innovations to Recent Debates 464 Daron Acemoglu
24 Comments on Acemoglu 492 Nancy L. Stokey
25 Population and Ideas: A Theory of Endogenous Growth 498 Charles I. Jones
26 Another View of Investment: 40 Years Later 522 Jess Benhabib and Bart Hobijn
27 General Comments on Part IV 546 Robert M. Solow
28 Reflections on Parts III and IV 550 Edmund S. Phelps
Index 565