Creator: Kehoe, Timothy J. and Prescott, Edward C. Series: Staff Report (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 418 Abstract:
Three of the arguments made by Temin (2008) in his review of Great Depressions of the Twentieth Century are demonstrably wrong: that the treatment of the data in the volume is cursory; that the definition of great depressions is too general and, in particular, groups slow growth experiences in Latin America in the 1980s with far more severe great depressions in Europe in the 1930s; and that the book is an advertisement for the real business cycle methodology. Without these three arguments — which are the results of obvious conceptual and arithmetical errors, including copying the wrong column of data from a source — his review says little more than that he does not think it appropriate to apply our dynamic general equilibrium methodology to the study of great depressions, and he does not like the conclusion that we draw: that a successful model of a great depression needs to be able to account for the effects of government policy on productivity.
In 2008, Peter Temin wrote a review of the book that appeared in the Journal of Economic Literature. This staff report and accompanying data file are in response to the review.
Citation for review: Temin, Peter. 2008. "Real Business Cycle Views of the Great Depression and Recent Events: A Review of Timothy J. Kehoe and Edward C. Prescott's Great Depressions of the Twentieth Century." Journal of Economic Literature, 46 (3): 669-84. DOI: https://doi.org/10.1257/jel.46.3.669
Creator: King, Robert G. (Robert Graham), Wallace, Neil., and Weber, Warren E. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 307 Abstract:
This paper shows that there can be equilibria in which exchange rates display randomness unrelated to fundamentals. This is demonstrated in the context of a two currency, one good model, with three agent types and cash-in-advance constraints. A crucial feature is that the type i agents, for i=l, 2, must satisfy a cash—in-advance constraint by holding currency i, while type 3 agents can satisfy it by holding either currency. It is shown that real allocations vary across the multiple equilibria if markets for hedging exchange risk do not exist and that the randomness is innocuous if complete markets exist.
Keyword: Foreign exchange rates, Macroeconomics, and Currencies Subject (JEL): E00 - Macroeconomics and monetary economics - General - General and F31 - International finance - Foreign exchange
Creator: Hammill, James H. and Nelson, Clarence W. (Clarence Walford), 1924- Description:
The Reserve-o-Meter was a tool used in presentations given by Clarence Nelson and James Hammill. From the August 6, 1993 presentation entitled Monetary Policy, Fiscal Policy and the Economy: What are Policy Goals and how does Policy Work, the Reserve-o-Meter is described as "an analog computer by which you can study the leverage or reserve-to-deposit multiplier for any bank." Included here are front and back images of the Reserve-o-Meter, the full presentation text and accompanying slides.
Creator: Uhlig, Harald, 1961- Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 342 Abstract:
[Please note that the following Greek lettering is improperly transcribed.] If [0,1] is a measure space of agents and X---- a collection of pairwise uncorrelated random variables with common finite mean U and variance a , one would like to establish a law of large numbers () Xdl = U. In this paper we propose to interpret () as a Pettis integral. Using the corresponding Riemann-type version of this integral, we establish (*) and interpret it as an L2-law of large numbers. Intuitively, the main idea is to integrate before drawing an W, thus avoiding well-know measurability problems. We discuss distributional properties of i.i.d. random shocks across the population. We given examples for the economic interpretability of our definition. Finally, we establish a vector-valued version of the law of large numbers for economies.
Keyword: L2 law of large numbers, Pettis integral, Khinchines law of large numbers, Large numbers, Riemann integral, and Random variable Subject (JEL): C10 - Econometric and Statistical Methods and Methodology: General