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Creator: Rotemberg, Julio. Series: Lucas expectations anniversary conference Abstract:
I show that a simple sticky price model based on Rotemberg (1982) is consistent with a variety of facts concerning the correlation of prices, hours and output. In particular, I show that it is consistent with a negative correlation between the detrended levels of output and prices when the Beveridge-Nelson method is used to detrend both the price and output data. Such a correlation, i.e.,a negative correlation between the predictable movements in output and the predictable movements in prices is present (and very strong) in U.S. data. Consistent with the model, this correlation is stronger than correlations between prices and hours of work. I also study the size of the predictable price movements that are associated with predictable output movements as well as the degree to which there are predictable movements in monetary aggregates associated with predictable movements in output. These facts are used to shed light on the degree to which the Federal Reserve has pursued a policy designed to stabilize expected inflation.
Palabra clave: Monetary policy, Output, Inflation, Federal Reserve, and Prices Tema: E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation, E24 - Macroeconomics : Consumption, saving, production, employment, and investment - Employment ; Unemployment ; Wages ; Intergenerational income distribution ; Aggregate human capital, E23 - Macroeconomics : Consumption, saving, production, employment, and investment - Production, and E50 - Monetary policy, central banking, and the supply of money and credit - General
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 155 Abstract:
A new approach to market behavior is suggested. This approach has a coherent game theoretic foundaton, addresses such anomalous economic behaviors as strikes, rigid wages and unemployment, regulation of financial markets, de-presssion, and nonmarket allocation, and, more generally, provides insights for Finance, Oligopoly Theory, Industrial Organization, and Macroeconomics. The central theme of the approach is that exchange technologies are a basic building block in a model, as are tastes, endowments, and production technologies. Moreover, the key feature of an institution of exchange is that it allows the making of a binding final offer.
Palabra clave: Bargaining problem, Market behavior, and Competitive allocation Tema: D51 - General equilibrium and disequilibrium - Exchange and production economies and C72 - Game theory and bargaining theory - Noncooperative games
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.
Palabra clave: Aggregate demand, Aggregate economy, Engineering capacity, and Economic capacity Tema: E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
Creator: Kehoe, Patrick J. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 373 Abstract:
This paper presents a simple counterexample to the belief that policy cooperation among benevolent governments is desirable. It also explains circumstances under which such counterexamples are possible and relates them to the literature on time inconsistency.
Versions of this report were published under the titles “International Policy Cooperation May Be Undesirable” and “Policy Cooperation Among Benevolent Governments May Be Undesirable.”
Palabra clave: Cooperation, Policy games, Policy coordination, and Macroeconomics Tema: F33 - International finance - International monetary arrangements and institutions, D46 - Market structure and pricing - Value theory, and F11 - Trade - Neoclassical models of trade
Creator: Nevin, Edward. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 9 Descripción:
The 1972 version of WP9 was published as part of the Ninth District Economic Series.
Palabra clave: Policy making, Banking, and Regionalism Tema: G21 - Financial institutions and services - Banks ; Other depository institutions ; Micro finance institutions ; Mortgages and R58 - Regional government analysis - Regional development policy
Creator: Greenwood, Jeremy, 1953- and Williamson, Stephen D. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 363 Abstract:
A two country overlapping generations model is constructed, in which financial intermediation arises endogenously as an incentive compatible means of economizing on monitoring costs. Because of the existence of transaction costs, money markets in the two countries are segmented and investors have differential access to international credit markets. The model is used to generate predictions concerning the role of international intermediation in economic development, and to examine the nature of business cycle phenomena across alternative exchange rate regimes. Disturbances are propagated by a credit allocation mechanism, which also lends a novel flavor to the model's long run properties.
Palabra clave: Generations, Exchange rate, Business cycles, Economic models, and Financial policy Tema: E32 - Prices, business fluctuations, and cycles - Business fluctuations ; Cycles and F41 - Macroeconomic aspects of international trade and finance - Open economy macroeconomics
Creator: Todd, Richard M. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 355 Abstract:
Forecasts are routinely revised, and these revisions are often the subject of informal analysis and discussion. This paper argues 1) that forecast revisions are analyzed because they help forecasters and forecast users to evaluate forecasts and forecasting procedures, and 2) that these analyses can be sharpened by using the forecasting model to systematically express its forecast revision as the sum of components identified with specific data revisions and forecast errors. An algorithm for this purpose is explained and illustrated.
Palabra clave: Forecasting, Forecast revisions, Innovation, and Data revisions Tema: E17 - General aggregative models - Forecasting and simulation