A Quick Refresher Course Macroeconomics
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Charles I Plosser: Shocks, Gaps, and Monetary Policy
Charles I Plosser: Shocks, gaps, and monetary policy Speech by Mr Charles I Plosser, President and Chief Executive Officer of the Federal Reserve Bank of Philadelphia, at the KAEA-Maekyung Forum, Korea-America Economic Association, Philadelphia, Pennsylvania, 4 January 2014. * * * The views expressed are my own and not necessarily those of the Federal Reserve System or the FOMC. I want to thank Bang Jeon, president of the Korea-America Economic Association (KAEA), who is on the faculty here at Drexel University, and Yongsung Chang, vice president of the KAEA, who is on the faculty at the University of Rochester, for inviting me to speak to this forum. The KAEA has hosted a number of prominent speakers in recent years at its annual meetings, and so it is a pleasure and an honor to speak to you this evening. Much has happened in the field of macroeconomics and monetary policy in the past seven years since I left Rochester to join the Federal Reserve Bank of Philadelphia. Today I want to highlight some key features of the recent recession and the recovery and to discuss how they have influenced my views on monetary policymaking. Before I begin, though, I would like to point out that my views are not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee (FOMC). The challenges presented by the recession and recovery have illustrated why policymakers must have a framework that provides a basis for their policy judgments. We say that our policymaking is data dependent, but without a lens through which we view economic data, it is impossible to interpret those data in any sort of useful way, particularly as they pertain to policy. -
Can News About the Future Drive the Business Cycle?
American Economic Review 2009, 99:4, 1097–1118 http://www.aeaweb.org/articles.php?doi 10.1257/aer.99.4.1097 = Can News about the Future Drive the Business Cycle? By Nir Jaimovich and Sergio Rebelo* Aggregate and sectoral comovement are central features of business cycles, so the ability to generate comovement is a natural litmus test for macroeconomic models. But it is a test that most models fail. We propose a unified model that generates aggregate and sectoral comovement in response to contemporaneous and news shocks about fundamentals. The fundamentals that we consider are aggregate and sectoral total factor productivity shocks as well as investment- specific technical change. The model has three key elements: variable capital utilization, adjustment costs to investment, and preferences that allow us to parameterize the strength of short-run wealth effects on the labor supply. JEL E13, E20, E32 ( ) Business cycle data feature two important forms of comovement. The first is aggregate comovement: major macroeconomic aggregates, such as output, consumption, investment, hours worked, and the real wage tend to rise and fall together. The second is sectoral comovement: output, employment, and investment tend to rise and fall together in different sectors of the economy. Robert Lucas 1977 argues that these comovement properties reflect the central role that aggre- ( ) gate shocks play in driving business fluctuations. However, it is surprisingly difficult to generate both aggregate and sectoral comovement, even in models driven by aggregate shocks. Robert J. Barro and Robert G. King 1984 show that the one-sector growth model generates aggregate ( ) comovement only in the presence of contemporaneous shocks to total factor productivity TFP . -
A Search-Theoretic Approach to Monetary Economics Author(S): Nobuhiro Kiyotaki and Randall Wright Source: the American Economic Review, Vol
American Economic Association A Search-Theoretic Approach to Monetary Economics Author(s): Nobuhiro Kiyotaki and Randall Wright Source: The American Economic Review, Vol. 83, No. 1 (Mar., 1993), pp. 63-77 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/2117496 . Accessed: 14/09/2011 06:08 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to The American Economic Review. http://www.jstor.org A Search-TheoreticApproach to MonetaryEconomics By NOBUHIRO KIYOTAKI AND RANDALL WRIGHT * The essentialfunction of money is its role as a medium of exchange. We formalizethis idea using a search-theoreticequilibrium model of the exchange process that capturesthe "doublecoincidence of wants problem"with pure barter. One advantage of the frameworkdescribed here is that it is very tractable.We also show that the modelcan be used to addresssome substantive issuesin monetaryeconomics, including the potentialwelfare-enhancing role of money,the interactionbetween specialization and monetaryexchange, and the possibilityof equilibriawith multiplefiat currencies.(JEL EOO,D83) Since the earliest writings of the classical theoretic equilibrium model of the exchange economists it has been understood that the process that seems to capture the "double essential function of money is its role as a coincidence of wants problem" with pure medium of exchange. -
Off to a Good Start: the Nber and the Measurement of National Income
NBER WORKING PAPER SERIES OFF TO A GOOD START: THE NBER AND THE MEASUREMENT OF NATIONAL INCOME Hugh Rockoff Working Paper 26895 http://www.nber.org/papers/w26895 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 March 2020 Many thanks are due to Katharine Abraham who discussed a previous draft when it was presented at the 2020 annual meeting of the American Economic Association in a session celebrating the 100th anniversary of the Bureau, and to Claudia Goldin for many helpful comments. The remaining errors are mine. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2020 by Hugh Rockoff. 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. Off to a Good Start: The NBER and the Measurement of National Income Hugh Rockoff NBER Working Paper No. 26895 March 2020 JEL No. B0,N12 ABSTRACT The creation of the National Bureau of Economic Research was a response to the bitter controversies over the distribution of income that roiled the United States during the Progressive Era. Thanks to Malcolm Rorty, a business economist, and Nahum I. Stone, an independent socialist economist, a “Committee on the Distribution of Income” was created; what might be considered the first name of the Bureau. -
Speech--Chairman Ben S. Bernanke
For release on delivery 9:30 a.m. EDT May 8, 2010 Commencement Address: The Economics of Happiness Remarks by Ben S. Bernanke Chairman Board of Governors of the Federal Reserve System at the University of South Carolina Columbia, South Carolina May 8, 2010 I want to begin by thanking the Board of Trustees of the University of South Carolina, President Pastides, and this year’s graduates for the great honor of addressing this commencement ceremony. Although I was born just across the border in Augusta, Georgia, I considered South Carolina my home from early childhood until I married and took my first academic job after graduate school. During most of that time, my family lived in Dillon, a couple of hours’ drive from here. I have had several occasions to visit Dillon and other places in the Carolinas since I got into government work, and I am both amazed and proud about the remarkable economic and social progress that has occurred since I grew up here. South Carolina, like America, is always reinventing itself, despite new and, it sometimes seems, ever more difficult challenges. I always find it difficult to choose a topic for a commencement talk. I am an economist, but my experience has been that people in a celebratory frame of mind are usually not that interested in an economics lecture. (I can’t quite understand why not.) Instead, they are generally looking for something more personal and inspirational. So I thought I would split the difference between an economics lecture and inspirational remarks and speak briefly about what economics and social science more generally have to say about personal happiness, and what those ideas imply both for economic policymaking and the choices each of you will make as you leave college for other pursuits. -
The Great Depression As a Historical Problem
Upjohn Institute Press The Great Depression as a Historical Problem Michael A. Bernstein University of California, San Diego Chapter 3 (pp. 63-94) in: The Economics of the Great Depression Mark Wheeler, ed. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research, 1998 DOI: 10.17848/9780585322049.ch3 Copyright ©1998. W.E. Upjohn Institute for Employment Research. All rights reserved. 3 The Great Depression as a Historical Problem Michael A. Bernstein University of California, San Diego It is now over a half-century since the Great Depression of the 1930s, the most severe and protracted economic crisis in American his tory. To this day, there exists no general agreement about its causes, although there tends to be a consensus about its consequences. Those who at the time argued that the Depression was symptomatic of a pro found weakness in the mechanisms of capitalism were only briefly heard. After World War II, their views appeared hysterical and exag gerated, as the industrialized nations (the United States most prominent among them) sustained dramatic rates of growth and as the economics profession became increasingly preoccupied with the development of Keynesian theory and the management of the mixed economy. As a consequence, the economic slump of the inter-war period came to be viewed as a policy problem rather than as an outgrowth of fundamental tendencies in capitalist development. Within that new context, a debate persisted for a few years, but it too eventually subsided. The presump tion was that the Great Depression could never be repeated owing to the increasing sophistication of economic analysis and policy formula tion. -
Front Matter In" Wesley Clair Mitchell: the Economic Scientist"
This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Wesley Clair Mitchell: The Economic Scientist Volume Author/Editor: Arthur F. Burns, ed. Volume Publisher: NBER Volume ISBN: 0-87014-052-3 Volume URL: http://www.nber.org/books/burn52-1 Publication Date: 1952 Chapter Title: Front matter in "Wesley Clair Mitchell: The Economic Scientist" Chapter Author: Arthur F. Burns Chapter URL: http://www.nber.org/chapters/c3093 Chapter pages in book: (p. -14 - 0) We Clair Mitchell The Economic'Scientist.' Edited by ARTHUR F. BURNS NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. NEW YORK 1952 S Copyright,1952, by Bureau of Economic Research, Inc. 1819 Broadway, New York 23 All Rights Reserved Typography by Oscar Leventhal, Inc. Presswork and binding by H. Wolff Library of Congress Catalog Card Number: 52-6013 PUBLICATIONS OF THE NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. NUMBER 53 WESLEY CLAIR MITCHELL THE ECONOMIC SCIENTIST '•1 OFFICERS 1952 Harry Scherman, Chairman C. C. Balderston, President Percival F. Brundage, Vice-President George B. Roberts, Treasurer W. J. Carson, Executive Director DIRECTORS AT LARGE Donald R. Beicher, American Telephone and Telegraph Company Oswald W. Knauth, Beau fort, South Carolina Simon Kuznets, University of Pennsylvania H. W. Laidler, Executive Director, League for Industrial Democracy Shepard Morgan, New York City C. Reinold Noyes, Princeton, New Jersey George B. Roberts, Vice-President, National City Bank Beardsley Rumi, New York City Harry Scherman, Chairman, Book-of-the-Month Club George Soule, Bennington College N. I. Stone, Consulting Economist J. Raymond Walsh, New York City Leo Wolman, Columbia University Theodore 0. -
Institutional Economics
INSTITUTIONAL ECONOMICS AT COLUMBIA UNIVERSITY Malcolm Rutherford University of Victoria (This Draft: March 2001) This paper draws on archival work using the James Bonbright Papers, J. M. Clark Papers, Joseph Dorfman Papers, Carter Goodrich Papers, Robert Hale Papers, and Wesley Mitchell Papers, all at the Rare Book and Manuscript Library, Columbia University, the Arthur F. Burns Papers at the Eisenhower Library, Abilene, Kansas, and the John R. Commons Papers at the State Historical Society of Wisconsin. My thanks to Lowell Harriss, Aaron Warner, Eli Ginzberg, Donald Dewey, Mark Perlman, Daniel Fusfeld, Mark Blaug, and Walter Neale for sharing their recollections of Columbia. Thanks also to my research assistant Cristobal Young. Any errors are my responsibility. This research has been supported by a Social Science and Humanities Research Council of Canada research grant (project # 410-99-0465). 1 1. Introduction In a number of recent papers I have attempted to outline the nature of the institutionalist movement in American economics in the interwar period (Rutherford 2000a, 2000b, 2000c). At that time institutionalism was a very significant part of American economics. In terms of research output and the production of graduate students, the main centers for institutionalism were the university of Chicago (until 1926 and the departure of J. M. Clark), the University of Wisconsin, the Robert Brookings Graduate School (which existed only briefly between 1923 and 1928), and, after the arrival of Wesley Mitchell in 1913, and J. M. Clark in 1926, Columbia University. Columbia University became the academic home of a large concentration of economists of institutionalist leaning, and other Schools and Departments in the University, particularly Business, Law, Sociology, and Philosophy, also contained many people of similar or related persuasion. -
Milton Friedman: a Bibliography
__________________________________________________________________ MILTON FRIEDMAN: A BIBLIOGRAPHY Compiled by Julio H. Cole1 Milton Friedman (1912-2006), the world-famous author of Capitalism and Freedom (1962) and Free to Choose (1980), was one of the most influential economists of the 20th century, and his memory will live long in the lore of economics. To mark the centenary of his birth, Laissez-Faire is pleased to publish this bibliography, the most complete listing to date of his scholarly writings. It provides both an indication of the breadth of his interests, and a measure of the magnitude of his contribution to economic scholarship. A. Books by Milton Friedman .…………………………………………… 98 B. Other Publications by Milton Friedman .……………………………… 100 C. Published Correspondence ……………………………………………. 120 D. Published Interviews ...………………………………………………... 121 1Professor of Economics, Universidad Francisco Marroquín (Guatemala). This bibliography is based upon three earlier bibliographical orientations to Friedman‘s writings: Niels Thygesen, ―The Scientific Contributions of Milton Friedman,‖ Scandinavian Journal of Economics, 79 (1977): 84-98, Kurt Leube (ed.), The Essence of Friedman (Stanford, CA: Hoover Institution Press, 1987), pp. 526-51 (compiled by Gloria Valentine), and Marc Lavoie and Mario Seccareccia (eds.), Milton Friedman et son oeuvre (Montreal: Presses de l‘Université de Montréal, 1993), pp. 191-24 (compiled by Gilles Dostaler). It includes books authored, co-authored or edited by Milton Friedman, introductions and forewords to books by other authors, articles in scholarly and professional journals, comments and replies, chapters in edited volumes, articles in encyclopedias and general interest magazines, book reviews, and published interviews. It does not include articles published in newspapers or in news magazines, speeches, or testimonies to congressional committees. -
Front Matter, EVIDENCES OP LONG SWINGS in AGGREGATE
This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Evidences of Long Swings in Aggregate Construction Since the Civil War Volume Author/Editor: Moses Abramovitz Volume Publisher: NBER Volume ISBN: 0-87014-404-9 Volume URL: http://www.nber.org/books/abra64-1 Publication Date: 1964 Chapter Title: Front matter, Evidences of Long Swings in Aggregate Construction since the Civil War Chapter Author: Moses Abramovitz Chapter URL: http://www.nber.org/chapters/c1799 Chapter pages in book: (p. -14 - 0) OCCASIONAL PAPER EVIDENCESOP LONG SWINGS IN AGGREGATE CONSTRUCTION SINCE THE CIVILWAR MOSESABRAMOVITZ StanfordUniversity Published by NATIONAL BUREAU OF ECONOMIC RESEARCH NEW YORK Distributed by COLUMBIA UNIVERSITYPRESS NEW YORK and LONDON Copyright0 1964 by NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. 261 Madison Avenue, New York 16, N. Y. All Rights Reserved LIBRARY OF CONGRESS CATALOG CARD NUMBER: 64-7747 PRICE: $4.00 Printed in the United States of America NATIONAL BUREAU OF ECONOMIC RESEARCH 1964 OFFICERS Albert J. Hettinger, Jr., Chairman Arthur F. Burns, President Frank W. Fetter, Vice-President Donald B. Woodward, Treasurer Solomon Fabricant, Director of Research Geoffrey H. Moore, Associate Director of Research Hal B. Lary, Associate Director of Research William J. Carson, Executive Director DJRECTORS AT LARGE Robert B. Anderson, New York City Wallace J. Campbell, Foundation for Cooperative Housing Erwin D. Canham, Christian Science Monitor Solomon Fabricant, New York University Marion B. Folsom, Eastman Kodak Company Crawford H. Greenewalt, E. I. du Pont de Nemours & Company Gabriel Hauge, Manufacturers Hanover Trust Company A. J. Hayes, International Association of Machinists Albert J. -
Gross Domestic Product—An Index of Economic Welfare Or a Meaningless Metric?
SUBSCRIBE NOW AND RECEIVE CRISIS AND LEVIATHAN* FREE! “The Independent Review does not accept “The Independent Review is pronouncements of government officials nor the excellent.” conventional wisdom at face value.” —GARY BECKER, Noble Laureate —JOHN R. MACARTHUR, Publisher, Harper’s in Economic Sciences Subscribe to The Independent Review and receive a free book of your choice* such as the 25th Anniversary Edition of Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Founding Editor Robert Higgs. This quarterly journal, guided by co-editors Christopher J. Coyne, and Michael C. Munger, and Robert M. Whaples offers leading-edge insights on today’s most critical issues in economics, healthcare, education, law, history, political science, philosophy, and sociology. Thought-provoking and educational, The Independent Review is blazing the way toward informed debate! Student? Educator? Journalist? Business or civic leader? Engaged citizen? This journal is for YOU! *Order today for more FREE book options Perfect for students or anyone on the go! The Independent Review is available on mobile devices or tablets: iOS devices, Amazon Kindle Fire, or Android through Magzter. INDEPENDENT INSTITUTE, 100 SWAN WAY, OAKLAND, CA 94621 • 800-927-8733 • [email protected] PROMO CODE IRA1703 Etceteras . Gross Domestic Product—an Index of Economic Welfare or a Meaningless Metric? ROBERT HIGGS The blind transfer of the striving for quantitative measurements to a field in which the specific conditions are not present which give it its basic impor- tance in the natural sciences . not only leads frequently to the selection for study of the most irrelevant aspects of the phenomena because they happen to be measurable, but also to “measurements” and assignments of numerical values which are absolutely meaningless. -
A Macroeconomics Reader
A Macroeconomics Reader Edited by Brian Snowdon and Howard R. Vane London and New York Contents Preface xi 1 The development of modern macroeconomics: a rough guide Brian Snowdon and Howard R. Vane 1 Part I Keynesian economics and the Keynesian revolution 27 Introduction 29 2 Keynesian economics: the search for first principles Alan Coddington Journal of Economic Literature (1976) 14, December, pp. 1258-73 36 3 On different interpretations of the General Theory Don Patinkin Journal of Monetary Economics (1990) 26, October, pp. 205-43 55 4 Keynes's General Theory: interpreting the interpretations Bill Gerrard Economic Journal (1991) 101, March, pp. 276-87 95 5 The fall and rise of Keynesian economics Alan S. Blinder Economic Record (1988) December, pp. 278-94 109 6 Price flexibility and output stability: an old Keynesian view James Tobin Journal of Economic Perspectives (1993) 7, Winter, pp. 45-65 135 Part II The monetarist counter-revolution 157 Introduction 159 7 The role of monetary policy Milton Friedman American Economic Review (1968) 58, March, pp. 1-17 164 viii Contents 8 The structure of monetarism Thomas Mayer Kredit und Kapital (1975) 8, pp. 191-215, 292-313 180 9 Monetarism: an interpretation and an assessment David Laidler Economic Journal (1981) 91, March, pp. 1-28 216 10 The monetarist controversy revisited Franco Modigliani Contemporary Policy Issues (1988) 6, October, pp. 3-18 247 Part III The challenge of rational expectations and new classical macroeconomics 263 Introduction 265 11 After Keynesian macroeconomics Robert E. Lucas and Thomas J. Sargent After the Phillips Curve: Persistence of High Inflation and High Unemployment (1978) Boston, MA: Federal Reserve Bank of Boston, pp.