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McKay, Alisdair

Works: 7 works in 45 publications in 1 language and 184 library holdings
Roles: Author
Classifications: HB1, 330
Publication Timeline
Publications about Alisdair McKay
Publications by Alisdair McKay
Most widely held works by Alisdair McKay
The brevity and violence of contractions and expansions by Alisdair McKay( Book )
16 editions published in 2006 in English and held by 34 libraries worldwide
Early studies of business cycles argued that contractions in economic activity were briefer (shorter) and more violent (rapid) than expansions. This paper systematically investigates this claim and in the process discovers a robust new business cycle fact: expansions and contractions in output are equally brief and violent but contractions in employment are briefer and more violent than expansions. The difference arises because employment typically lags output around peaks but both series roughly coincide in their troughs. We discuss the performance of existing business cycle models in accounting for this fact, and conclude that none can fully account for it. We then show that a simple model that combines three familiar ingredients-labor hoarding, a choice of when to scrap old technologies, and job training or job search-can account for the business cycle fact
The role of automatic stabilizers in the U.S. business cycle by Alisdair McKay( Book )
11 editions published in 2013 in English and held by 15 libraries worldwide
Most countries have automatic rules in their tax-and-transfer systems that are partly intended to stabilize economic fluctuations. This paper measures how effective they are. We put forward a model that merges the standard incomplete-markets model of consumption and inequality with the new Keynesian model of nominal rigidities and business cycles, and that includes most of the main potential stabilizers in the U.S. data, as well as the theoretical channels by which they may work. We find that the conventional argument that stabilizing disposable income will stabilize aggregate demand plays a negligible role on the effectiveness of the stabilizers, whereas tax-and-transfer programs that affect inequality and social insurance can have a large effect on aggregate volatility. However, as currently designed, the set of stabilizers in place in the United States has barely had any effect on volatility. According to our model, expanding safety-net programs, like food stamps, has the largest potential to enhance the effectiveness of the stabilizers
Rational inattention to discrete choices : a new foundation for the multinomial logit model by Filip Matějka( Book )
3 editions published in 2011 in English and held by 3 libraries worldwide
The Power of Forward Guidance Revisited by Alisdair McKay( Book )
5 editions published in 2015 in English and held by 3 libraries worldwide
In recent years, central banks have increasingly turned to "forward guidance" as a central tool of monetary policy, especially as interest rates around the world have hit the zero lower bound. Standard monetary models imply that far future forward guidance is extremely powerful: promises about far future interest rates have huge effects on current economic outcomes, and these effects grow with the horizon of the forward guidance. We show that the power of forward guidance is highly sensitive to the assumption of complete markets. If agents face uninsurable income risk and borrowing constraints, a precautionary savings effect tempers their responses to far future promises about interest rates. As a consequence, the ability of central banks to combat recessions using small changes in interest rates far in the future, is greatly reduced relative to the complete markets benchmark. We show that the effects of precautionary savings motives can be captured by a simplified version of our model that generates discounting in the representative agent's Euler equation. This discounted Euler equation can be easily included in standard business cycle models
Optimal automatic stabilizers by Alisdair McKay( Book )
6 editions published in 2016 in English and held by 3 libraries worldwide
Should the generosity of unemployment benefits and the progressivity of income taxes depend on the presence of business cycles? This paper proposes a tractable model where there is a role for social insurance against uninsurable shocks to income and unemployment, as well as inefficient business cycles driven by aggregate shocks through matching frictions and nominal rigidities. We derive an augmented Baily-Chetty formula showing that the optimal generosity and progressivity depend on a macroeconomic stabilization term. Using a series of analytical examples, we show that this term typically pushes for an increase in generosity and progressivity as long as slack is more responsive to social programs in recessions. A calibration to the U.S. economy shows that taking concerns for macroeconomic stabilization into account raises the optimal unemployment benefits replacement rate by 13 percentage points but has a negligible impact on the optimal progressivity of the income tax. More generally, the role of social insurance programs as automatic stabilizers affects their optimal design
Essays on macroeconomics by Alisdair McKay( Archival Material )
1 edition published in 2010 in English and held by 2 libraries worldwide
The discounted Euler equation a note by Alisdair McKay( Book )
3 editions published in 2016 in English and held by 1 library worldwide
We present a simple model with unemployment risk and borrowing constraints which yields a "discounted Euler equation." This feature of the model mutes the extent to which news about far future real interest rates (i.e., forward guidance) affects current outcomes. We show that this simple model approximates the outcomes of a rich model with uninsurable income risk and borrowing constraints in response to a forward guidance shock. The model is simple enough to be easily incorporated into standard DSGE models. We illustrate this with an application to the zero lower bound
Alternative Names
MacKay, Alisdair
Mc Kay, Alisdair
McKay, Alisadair
McKay, Alisdair
McKay, Alisdair G.
English (45)
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