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E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
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- Creator:
- Smith, Bruce D., d. 2002.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 230
- Abstract:
- An overlapping generations model is developed that contains labor markets in which adverse selection problems arise. As a response to these problems, quantity rationing of labor occurs. In addition, the model is capable of generating (a) random employment and prices despite the absence of underlying uncertainty in equilibrium; (b) a statistical (nondegenerate) Phillips curve; (c) procyclical movements in productivity; (d) correlations between aggregate demand and unemployment (and output); (e) an absence of correlation between unemployment (employment) and real wages. In addition, the Phillips curve obtained typically has the "correct" slope. Finally, the model reconciles the theoretical importance and observed unimportance of intertemporal substitution effects, and explains why price level stability may be a poor policy objective.
- Keyword:
- Unemployment, Productivity, Prices, Philips curve, Money, and Labor
- Subject:
- E24 - Macroeconomics : Consumption, saving, production, employment, and investment - Employment ; Unemployment ; Wages ; Intergenerational income distribution ; Aggregate human capital, E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian, and E32 - Prices, business fluctuations, and cycles - Business fluctuations ; Cycles
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- Creator:
- Sargent, Thomas J.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 31
- Keyword:
- Capital stock and Investment schedule
- Subject:
- H54 - National government expenditures and related policies - Infrastructures ; Other public investment and capital stock and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
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- Creator:
- Aiyagari, S. Rao.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 452
- Keyword:
- Keynes, Government policy, Economic fluctuation, Rational expectations, Technology, Random shocks, Animal spirits, Consumer taste, Frictional unemployment, 1987 stock market crash, and Stock price determination
- Subject:
- E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian and G14 - General financial markets - Information and market efficiency ; Event studies
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- Creator:
- Smith, Bruce D., d. 2002.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 240
- Abstract:
- A model of a labor market is developed in which agents possess private information about their marginal products. As a result, involuntary unemployment may arise as a consequence of attempts by firms to create appropriate self-selection incentives. Moreover, employment lotteries may arise for the same reason despite the fact that, in equilibrium, there is no uncertainty in the model. When employment is random, this is both privately and socially desirable. Finally, it is shown that the unemployment that arises is consistent with (a) pro-cyclical aggregate real wages and productivity, (b) employment that fluctuates (at individual and aggregate levels) much more than real wages.
- Keyword:
- Private information, Labor market, Employment, and Wages
- Subject:
- D82 - Information, knowledge, and uncertainty - Asymmetric and private information, E24 - Macroeconomics : Consumption, saving, production, employment, and investment - Employment ; Unemployment ; Wages ; Intergenerational income distribution ; Aggregate human capital, and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
-
- Creator:
- Aiyagari, S. Rao.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 379
- Keyword:
- Keynes, Government policy, Economic fluctuation, 1987 stock market crash, Technology, Random shocks, Animal spirits, Consumer taste, Frictional unemployment, Rational expectations, and Stock price determination
- Subject:
- E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian and G14 - General financial markets - Information and market efficiency ; Event studies
-
- Creator:
- Bryant, John B.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 151
- Keyword:
- Competitive equilibrium model, Overlapping generations, Banking panic, and Fiat money
- Subject:
- G21 - Financial institutions and services - Banks ; Other depository institutions ; Micro finance institutions ; Mortgages and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
-
- Creator:
- Bryant, John B.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 114
- Keyword:
- Great Depression, Keynesian analysis, Fiat money, and Multiple equilibria model
- Subject:
- C68 - Mathematical methods and programming - Computable general equilibrium models, N12 - Macroeconomics and monetary economics ; Growth and fluctuations - United States ; Canada : 1913-, and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
-
- Creator:
- Bryant, John B. and Supel, Thomas M.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 116
- Keyword:
- Aggregate demand, Aggregate economy, Engineering capacity, and Economic capacity
- Subject:
- E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
-
- Creator:
- Bryant, John B. and Supel, Thomas M.
- Series:
- Working paper (Federal Reserve Bank of Minneapolis. Research Dept.)
- Number:
- 116
- Abstract:
- It is commonly asserted that with excess plant capacity, expansive policy stimulates output and lowers unemployment without substantially boosting inflation, while at full capacity most of the impact is on inflation. This assertion is critically examined. First, two common definitions of capacity--engineering and economic—are examined and found to be nebulous. The concepts of supply and demand are older, but better. Full capacity is reinterpreted as points where the supply curve is steep and excess capacity as points where it is fairly flat. Then the "Keynesian" model in which stimulative policy shifts only the demand curve is compared to the "classical" model where stimulative policy shifts both demand and supply curves. For the former model the assertion on capacity utilization is correct, while in the latter it is not. Empirical tests are performed to determine whether measured capacity utilization is useful for predicting inflation. The tests are ambiguous, but certainly do not strongly favor capacity utilization.
- Keyword:
- Aggregate demand, Aggregate economy, Engineering capacity, and Economic capacity
- Subject:
- E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
-
- Creator:
- Edge, Rochelle Mary, 1971- and Rudd, Jeremy Bay, 1970-
- Series:
- Joint commitee on business and financial analysis
- Abstract:
- We add a nominal tax system to a sticky-price monetary business cycle model. When nominal interest income is taxed, the coefficient on inflation in a Taylor-type monetary policy rule must be significantly larger than one in order for the model economy to have a determinate rational expectations equilibrium. When depreciation is treated as a charge against taxable income, an even larger weight on inflation is required in the Taylor rule in order to obtain a determinate and stable equilibrium. These results have obvious implications for assessing the historical conduct of monetary policy.
- Keyword:
- Monetary policy, Business cycle, Cycle, Interest, Inflation, Policy, Prices, Monetary, Rational expectation, and Tax
- Subject:
- E43 - Money and interest rates - Determination of interest rates ; Term structure of interest rates, E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation, E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian, and E32 - Prices, business fluctuations, and cycles - Business fluctuations ; Cycles