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Creator: Faust, Jon. Series: Conference on economics and politics Abstract:
The Federal Reserve Act erected a unique structure of government decisionmaking, independent with elaborate rules balancing internal power. Historical evidence suggests that this outcome was a response to public conflict over inflation's redistributive powers. This paper documents and formalizes this argument: in the face of conflict over redistributive inflation, policy by majority can lead to policy that is worse, even fo the majority, than obvious alternatives. The bargaining solution of an independent board with properly balanced interests leads to a better outcome. Technically, this paper extends earlier work in making policy preferences endogenous and in extending the notion of equilibirum policy to such a world. Substantively, this work provides a simple grounding of policy preferences-largely missing heretofore-linking game theoretic models of policy to historical evidence about the formation of an independent monetary authority.
Sujeito: E58 - Monetary policy, central banking, and the supply of money and credit - Central banks and their policies, N12 - Macroeconomics and monetary economics ; Growth and fluctuations - United States ; Canada : 1913-, and E52 - Monetary policy, central banking, and the supply of money and credit - Monetary policy
Creator: Geweke, John and Keane, Michael P. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 237 Abstract:
This paper generalizes the normal probit model of dichotomous choice by introducing mixtures of normals distributions for the disturbance term. By mixing on both the mean and variance parameters and by increasing the number of distributions in the mixture these models effectively remove the normality assumption and are much closer to semiparametric models. When a Bayesian approach is taken, there is an exact finite-sample distribution theory for the choice probability conditional on the covariates. The paper uses artificial data to show how posterior odds ratios can discriminate between normal and nonnormal distributions in probit models. The method is also applied to female labor force participation decisions in a sample with 1,555 observations from the PSID. In this application, Bayes factors strongly favor mixture of normals probit models over the conventional probit model, and the most favored models have mixtures of four normal distributions for the disturbance term.
Palavra-chave: Discrete choice, Markov chain Monte Carlo, and Normal mixture Sujeito: C25 - Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities and C11 - Bayesian Analysis: General