King, Robert G. (Robert Graham)
Overview
Works:  84 works in 393 publications in 2 languages and 2,474 library holdings 

Genres:  Commercial treaties History 
Roles:  Author, Conceptor, Editor, Scenarist, Honoree 
Classifications:  HB1, 330 
Publication Timeline
.
Most widely held works about
Robert G King
 Appraising King and Levine's study on financial systems and economic growth in light of recent data : 19681997 by Raina Sharma( Book )
Most widely held works by
Robert G King
The Chinese economic area : economic integration without a free trade agreement by
Randall Jones(
Book
)
19 editions published in 1992 in English and German and held by 196 WorldCat member libraries worldwide
This paper describes the de facto economic integration taking place between China, Hong Kong and Taiwan  the "Chinese Economic Area"  and analyses basic factors underlying the process. Even in the face of weak economic performance in OECD countries the integration has helped underpin rapid growth in all three economies, particularly in China's southeastern provinces. If Chinese policies are further liberalised within a reasonably stable macroenvironment, the Chinese Economic Area could become a major player in world markets within one generation and require massive adjustment in the rest of the world
19 editions published in 1992 in English and German and held by 196 WorldCat member libraries worldwide
This paper describes the de facto economic integration taking place between China, Hong Kong and Taiwan  the "Chinese Economic Area"  and analyses basic factors underlying the process. Even in the face of weak economic performance in OECD countries the integration has helped underpin rapid growth in all three economies, particularly in China's southeastern provinces. If Chinese policies are further liberalised within a reasonably stable macroenvironment, the Chinese Economic Area could become a major player in world markets within one generation and require massive adjustment in the rest of the world
Optimal monetary policy by
Aubhik Khan(
Book
)
22 editions published between 2000 and 2002 in English and held by 126 WorldCat member libraries worldwide
Optimal monetary policy maximizes the welfare of a representative agent, given frictions in the economic environment. Constructing a model with two sets of frictions  costly price adjustment by imperfectly competitive firms and costly exchange of wealth for goods  we find optimal monetary policy is governed by two familiar principles. First, the average level of the nominal interest rate should be sufficiently low, as suggested by Milton Friedman, that there should be deflation on average. Yet, the Keynesian frictions imply that the optimal nominal interest rate is positive. Second, as various shocks occur to the real and monetary sectors, the price level should be largely stabilized, as suggested by Irving Fisher, albeit around a deflationary trend path. Since expected inflation is roughly constant through time, the nominal interest rate must therefore vary with the Fisherian determinants of the real interest rate. Although the monetary authority has substantial leverage over real activity in our model economy, it chooses real allocations that closely resemble those which would occur if prices were flexible. In our benchmark model, there is some tendency for the monetary authority to smooth nominal and real interest rates
22 editions published between 2000 and 2002 in English and held by 126 WorldCat member libraries worldwide
Optimal monetary policy maximizes the welfare of a representative agent, given frictions in the economic environment. Constructing a model with two sets of frictions  costly price adjustment by imperfectly competitive firms and costly exchange of wealth for goods  we find optimal monetary policy is governed by two familiar principles. First, the average level of the nominal interest rate should be sufficiently low, as suggested by Milton Friedman, that there should be deflation on average. Yet, the Keynesian frictions imply that the optimal nominal interest rate is positive. Second, as various shocks occur to the real and monetary sectors, the price level should be largely stabilized, as suggested by Irving Fisher, albeit around a deflationary trend path. Since expected inflation is roughly constant through time, the nominal interest rate must therefore vary with the Fisherian determinants of the real interest rate. Although the monetary authority has substantial leverage over real activity in our model economy, it chooses real allocations that closely resemble those which would occur if prices were flexible. In our benchmark model, there is some tendency for the monetary authority to smooth nominal and real interest rates
Monetary discretion, pricing complementarity, and dynamic multiple equilibria by
Robert G King(
Book
)
22 editions published between 2003 and 2005 in English and held by 114 WorldCat member libraries worldwide
In a plainvanilla New Keynesian model with twoperiod staggered pricesetting, discretionary monetary policy leads to multiple equilibria. Complementarity between the pricing decisions of forwardlooking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. We compute a traditional inflation bias equilibrium, in which pricesetters are optimistic, rationally expecting small adjustments by other firms. But there is another steadystate equilibrium in which price setters are pessimistic and inflation is much higher. Further, we find that there are multiple equilibria at a point in time, not just in steady states. In a stochastic setting with equilibrium selection each period determined by an i.i.d. sunspot, there is greater inflation bias on average than if pricesetters were always optimistic. The sunspot realization also has real effects: periods of higher than average inflation are accompanied by low output. Thus, increased real volatility may be an additional cost of discretion in monetary policy
22 editions published between 2003 and 2005 in English and held by 114 WorldCat member libraries worldwide
In a plainvanilla New Keynesian model with twoperiod staggered pricesetting, discretionary monetary policy leads to multiple equilibria. Complementarity between the pricing decisions of forwardlooking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. We compute a traditional inflation bias equilibrium, in which pricesetters are optimistic, rationally expecting small adjustments by other firms. But there is another steadystate equilibrium in which price setters are pessimistic and inflation is much higher. Further, we find that there are multiple equilibria at a point in time, not just in steady states. In a stochastic setting with equilibrium selection each period determined by an i.i.d. sunspot, there is greater inflation bias on average than if pricesetters were always optimistic. The sunspot realization also has real effects: periods of higher than average inflation are accompanied by low output. Thus, increased real volatility may be an additional cost of discretion in monetary policy
The banking system : a preface to public interest analysis by
Stanley W Black(
Book
)
3 editions published in 1975 in English and held by 110 WorldCat member libraries worldwide
3 editions published in 1975 in English and held by 110 WorldCat member libraries worldwide
Pricing, production and persistence by
Michael Dotsey(
)
17 editions published between 2001 and 2005 in English and held by 103 WorldCat member libraries worldwide
Though built with increasingly precise microfoundations, modern optimizing sticky price models have displayed a chronic inability to generate large and persistent real responses to monetary shocks, as recently stressed by Chari, Kehoe and McGrattan [2000]. This is an ironic finding, since Taylor [1980] and other researchers were motivated to study sticky price models in part by the objective of generating large and persistent business fluctuations. We trace this lack of persistence to a standard view of the cyclical behavior of real marginal cost built into current sticky price macro models. Using both a small loglinear macroeconomic model and a larger fully articulated model, we show how an alternative view of real marginal cost can lead to substantial persistence. This alternative view is based on three features of the 'supply side' of the economy that we believe are realistic: an important role for produced inputs, variable capacity utilization, and labor supply variability through changes in employment. Importantly, these 'real flexibilities' work together to dramatically reduce the elasticity of marginal cost with respect to output, from levels much larger than unity in CKM to values much smaller than unity in our analysis. These 'real flexibilities' consequently reduce the extent of price adjustments by firms in timedependent pricing economies and the incentives for paying fixed costs of adjustment in statedependent pricing economies. The structural features also lead the sticky price model to display volatility and comovement of factor inputs and factor prices that are more closely in line with conventional wisdom about business cycles
17 editions published between 2001 and 2005 in English and held by 103 WorldCat member libraries worldwide
Though built with increasingly precise microfoundations, modern optimizing sticky price models have displayed a chronic inability to generate large and persistent real responses to monetary shocks, as recently stressed by Chari, Kehoe and McGrattan [2000]. This is an ironic finding, since Taylor [1980] and other researchers were motivated to study sticky price models in part by the objective of generating large and persistent business fluctuations. We trace this lack of persistence to a standard view of the cyclical behavior of real marginal cost built into current sticky price macro models. Using both a small loglinear macroeconomic model and a larger fully articulated model, we show how an alternative view of real marginal cost can lead to substantial persistence. This alternative view is based on three features of the 'supply side' of the economy that we believe are realistic: an important role for produced inputs, variable capacity utilization, and labor supply variability through changes in employment. Importantly, these 'real flexibilities' work together to dramatically reduce the elasticity of marginal cost with respect to output, from levels much larger than unity in CKM to values much smaller than unity in our analysis. These 'real flexibilities' consequently reduce the extent of price adjustments by firms in timedependent pricing economies and the incentives for paying fixed costs of adjustment in statedependent pricing economies. The structural features also lead the sticky price model to display volatility and comovement of factor inputs and factor prices that are more closely in line with conventional wisdom about business cycles
Nontraded goods, nontraded factors, and international nondiversification by
Marianne Baxter(
Book
)
11 editions published in 1995 in English and held by 102 WorldCat member libraries worldwide
Can the presence of nontraded consumption goods explain the high degree of 'home bias' displayed by investor portfolios? We find that the answer is no, so long as individuals have access to free international trade in financial assets. In particular, it is never optimal to exhibit home bias with respect to domestic tradedgood equities. By contrast, an optimal portfolio may exhibit substantial home bias with respect to nontradedgood equities, although this result requires a very low degree of substitution between traded and nontraded goods in the utility function. Further, our analysis uncovers a second puzzle: the composition of investors' portfolios appears to be strongly at variance with the predictions of the model that incorporates nontraded goods
11 editions published in 1995 in English and held by 102 WorldCat member libraries worldwide
Can the presence of nontraded consumption goods explain the high degree of 'home bias' displayed by investor portfolios? We find that the answer is no, so long as individuals have access to free international trade in financial assets. In particular, it is never optimal to exhibit home bias with respect to domestic tradedgood equities. By contrast, an optimal portfolio may exhibit substantial home bias with respect to nontradedgood equities, although this result requires a very low degree of substitution between traded and nontraded goods in the utility function. Further, our analysis uncovers a second puzzle: the composition of investors' portfolios appears to be strongly at variance with the predictions of the model that incorporates nontraded goods
The case for price stability by
Marvin Goodfriend(
Book
)
14 editions published in 2001 in English and held by 101 WorldCat member libraries worldwide
Reasoning within the New Neoclassical Synthesis (NNS) we previously recommended that price stability should be the primary objective of monetary policy. We called this a neutral policy because it keeps output at its potential, defined as the outcome of an imperfectly competitive real business cycle model with a constant markup of price over marginal cost. We explore the foundations of neutral policy more fully in this paper. Using the principles of public finance, we derive conditions under which markup constancy is optimal monetary policy. Price stability as the primary policy objective has been criticized on a number of grounds which we evaluate in this paper. We show that observed inflation persistence in U.S. time series is consistent with the absence of structural inflation stickiness as is the case in the benchmark NNS economy. We consider reasons why monetary policy might depart from markup constancy and price stability, but we argue that optimal departures are likely to be minor. Finally, we argue that the presence of nominal wage stickiness in labor markets does not undermine the case for neutral policy and price stability
14 editions published in 2001 in English and held by 101 WorldCat member libraries worldwide
Reasoning within the New Neoclassical Synthesis (NNS) we previously recommended that price stability should be the primary objective of monetary policy. We called this a neutral policy because it keeps output at its potential, defined as the outcome of an imperfectly competitive real business cycle model with a constant markup of price over marginal cost. We explore the foundations of neutral policy more fully in this paper. Using the principles of public finance, we derive conditions under which markup constancy is optimal monetary policy. Price stability as the primary policy objective has been criticized on a number of grounds which we evaluate in this paper. We show that observed inflation persistence in U.S. time series is consistent with the absence of structural inflation stickiness as is the case in the benchmark NNS economy. We consider reasons why monetary policy might depart from markup constancy and price stability, but we argue that optimal departures are likely to be minor. Finally, we argue that the presence of nominal wage stickiness in labor markets does not undermine the case for neutral policy and price stability
Resuscitating real business cycles by
Robert G King(
Book
)
16 editions published between 1988 and 2000 in English and Undetermined and held by 99 WorldCat member libraries worldwide
The Real Business Cycle (RBC) research program has grown spectacularly over the last decade, as its concepts and methods have diffused into mainstream macroeconomics. Yet, there is increasing skepticism that technology shocks are a major source of business fluctuations. This chapter exposits the basic RBC model and shows that it requires large technology shocks to produce realistic business cycles. While Solow residuals are sufficiently volatile, these imply frequent technological regress. Productivity studies permitting unobserved factor variation find much smaller technology shocks, suggesting the imminent demise of real business cycles. However, we show that greater factor variation also dramatically amplifies shocks: a RBC model with varying capital utilization yields realistic business cycles from small, nonnegative changes in technology
16 editions published between 1988 and 2000 in English and Undetermined and held by 99 WorldCat member libraries worldwide
The Real Business Cycle (RBC) research program has grown spectacularly over the last decade, as its concepts and methods have diffused into mainstream macroeconomics. Yet, there is increasing skepticism that technology shocks are a major source of business fluctuations. This chapter exposits the basic RBC model and shows that it requires large technology shocks to produce realistic business cycles. While Solow residuals are sufficiently volatile, these imply frequent technological regress. Productivity studies permitting unobserved factor variation find much smaller technology shocks, suggesting the imminent demise of real business cycles. However, we show that greater factor variation also dramatically amplifies shocks: a RBC model with varying capital utilization yields realistic business cycles from small, nonnegative changes in technology
Inflation targeting in a St. Louis model of the 21st century by
Robert G King(
Book
)
14 editions published in 1996 in English and held by 96 WorldCat member libraries worldwide
Inflation targeting is a monetary policy rule that has implications for both the average performance of an economy and its business cycle behavior. We use a modern, rational expectations model to study the twin effects of this policy rule. The model highlights forward looking consumption and labor supply decisions by households and forwardlooking investment and pricesetting decisions by firms. In it, monetary policy has real effects because imperfectly competitive firms are constrained to adjust prices only infrequently and satisfy all demand at posted prices. In this sticky price' model, there are also effects of the average rate of inflation on the amount of time that individuals must devote to shopping activity and on the average markup of price over cost that firms can charge. However, in terms of the welfare effects of longrun inflation, it is optimal to set monetary policy so that the nominal interest rate is close to zero, replicating in an imperfectly competitive model the result that Friedman found under perfect competition. A perfect inflation target has desirable effects on the response of the macroeconomy to permanent shocks to productivity and money demand. Under such a policy rule, the monetary authority makes the money supply evolve so a model with sticky prices behaves much like one with flexible prices
14 editions published in 1996 in English and held by 96 WorldCat member libraries worldwide
Inflation targeting is a monetary policy rule that has implications for both the average performance of an economy and its business cycle behavior. We use a modern, rational expectations model to study the twin effects of this policy rule. The model highlights forward looking consumption and labor supply decisions by households and forwardlooking investment and pricesetting decisions by firms. In it, monetary policy has real effects because imperfectly competitive firms are constrained to adjust prices only infrequently and satisfy all demand at posted prices. In this sticky price' model, there are also effects of the average rate of inflation on the amount of time that individuals must devote to shopping activity and on the average markup of price over cost that firms can charge. However, in terms of the welfare effects of longrun inflation, it is optimal to set monetary policy so that the nominal interest rate is close to zero, replicating in an imperfectly competitive model the result that Friedman found under perfect competition. A perfect inflation target has desirable effects on the response of the macroeconomy to permanent shocks to productivity and money demand. Under such a policy rule, the monetary authority makes the money supply evolve so a model with sticky prices behaves much like one with flexible prices
Measuring business cycles : approximate bandpass filters for economic time series by
Marianne Baxter(
Book
)
12 editions published in 1995 in English and held by 94 WorldCat member libraries worldwide
This paper develops a set of approximate bandpass filters designed for use in a wide range of economic applications. In particular, we design and implement a specific bandpass filter which isolates businesscycle fluctuations in macroeconomic time series. This filter was designed to isolate fluctuations in the data which persist for periods of two through eight years. This filter also 'detrends' the data, in the sense that it will render stationary time series that are integrated of order two or less, or that contain deterministic time trends. We apply our filter to several of the key macroeconomic time series, and describe the picture of the U.S. postwar business cycle that emerges from our analysis. We also provide detailed comparisons with several alternative detrending methods
12 editions published in 1995 in English and held by 94 WorldCat member libraries worldwide
This paper develops a set of approximate bandpass filters designed for use in a wide range of economic applications. In particular, we design and implement a specific bandpass filter which isolates businesscycle fluctuations in macroeconomic time series. This filter was designed to isolate fluctuations in the data which persist for periods of two through eight years. This filter also 'detrends' the data, in the sense that it will render stationary time series that are integrated of order two or less, or that contain deterministic time trends. We apply our filter to several of the key macroeconomic time series, and describe the picture of the U.S. postwar business cycle that emerges from our analysis. We also provide detailed comparisons with several alternative detrending methods
Partial adjustment without apology by
Robert G King(
Book
)
13 editions published between 2003 and 2004 in English and held by 93 WorldCat member libraries worldwide
Many kinds of economic behavior appear to be governed by discrete and occasional individual choices. Despite this, econometric partial adjustment models perform relatively well at the aggregate level. Analyzing the classic employment adjustment problem, we show how discrete and occasional microeconomic adjustment is well described by a new form of partial adjustment model that aggregates the actions of a large number of heterogeneous producers. We begin by describing a basic model of discrete and occasional adjustment at the micro level, where production units are essentially restricted to either operate with a fixed number of workers or shut down. We show that this simple model is observationally equivalent at the market level to the standard rational expectations partial adjustment model. We then construct a related, but more realistic, model that incorporates the idea that increases or decreases in the size of an establishment's workforce are subject to fixed adjustment costs. In the market equilibrium of this model, employment responses to aggregate disturbances include changes both in employment selected by individual establishments and in the measure of establishments actively undertaking adjustment. Yet the model retains a partial adjustment flavor in its aggregate responses. Moreover, in contrast to existing models of discrete adjustment, our generalized partial adjustment model is sufficiently tractable to allow extension to general equilibrium
13 editions published between 2003 and 2004 in English and held by 93 WorldCat member libraries worldwide
Many kinds of economic behavior appear to be governed by discrete and occasional individual choices. Despite this, econometric partial adjustment models perform relatively well at the aggregate level. Analyzing the classic employment adjustment problem, we show how discrete and occasional microeconomic adjustment is well described by a new form of partial adjustment model that aggregates the actions of a large number of heterogeneous producers. We begin by describing a basic model of discrete and occasional adjustment at the micro level, where production units are essentially restricted to either operate with a fixed number of workers or shut down. We show that this simple model is observationally equivalent at the market level to the standard rational expectations partial adjustment model. We then construct a related, but more realistic, model that incorporates the idea that increases or decreases in the size of an establishment's workforce are subject to fixed adjustment costs. In the market equilibrium of this model, employment responses to aggregate disturbances include changes both in employment selected by individual establishments and in the measure of establishments actively undertaking adjustment. Yet the model retains a partial adjustment flavor in its aggregate responses. Moreover, in contrast to existing models of discrete adjustment, our generalized partial adjustment model is sufficiently tractable to allow extension to general equilibrium
Testing long run neutrality by
Robert G King(
Book
)
15 editions published in 1992 in English and held by 93 WorldCat member libraries worldwide
Propositions about long run neutrality are at the heart of most macroeconomic models. Yet, since the 1970's when Lucas and Sargent presented powerful critiques of traditional neutrality tests, empirical researchers have made little progress on testing these propositions. In this paper we show that. in spite of the LucasSargent critique. long run neutrality can be tested without specifying a complete model of economic activity. This is possible when the variables are integrated. In this case, permanent shifts in the historical data can be uncovered using VAR methods, and neutrality can be tested when there is a priori knowledge of one of the structural impact multipliers or one of the structural long run multipliers. In most circumstances such a priori knowledge is available. We use this framework to test four long run neutrality propositions: (i) the neutrality of money, (ii) the superneutrality of money. (iii) a vertical long run Phillips curve, and (iv) the Fisher effect. In each application, our a priori knowledge consists of a range of plausible values for the relevant impact and long run multipliers. We find that the U.S. postwar data are consistent with the neutrality of money and a vertical long run Phillips curve. but find evidence against the superneutrality of money and the long run Fisher relation. The sign of the estimated effect of money growth on output depends on the particular identifying assumption used. For a wide range of plausible identifying restrictions, nominal interest rates are found to move less than oneforone with inflation in the long run
15 editions published in 1992 in English and held by 93 WorldCat member libraries worldwide
Propositions about long run neutrality are at the heart of most macroeconomic models. Yet, since the 1970's when Lucas and Sargent presented powerful critiques of traditional neutrality tests, empirical researchers have made little progress on testing these propositions. In this paper we show that. in spite of the LucasSargent critique. long run neutrality can be tested without specifying a complete model of economic activity. This is possible when the variables are integrated. In this case, permanent shifts in the historical data can be uncovered using VAR methods, and neutrality can be tested when there is a priori knowledge of one of the structural impact multipliers or one of the structural long run multipliers. In most circumstances such a priori knowledge is available. We use this framework to test four long run neutrality propositions: (i) the neutrality of money, (ii) the superneutrality of money. (iii) a vertical long run Phillips curve, and (iv) the Fisher effect. In each application, our a priori knowledge consists of a range of plausible values for the relevant impact and long run multipliers. We find that the U.S. postwar data are consistent with the neutrality of money and a vertical long run Phillips curve. but find evidence against the superneutrality of money and the long run Fisher relation. The sign of the estimated effect of money growth on output depends on the particular identifying assumption used. For a wide range of plausible identifying restrictions, nominal interest rates are found to move less than oneforone with inflation in the long run
The incredible Volcker disinflation by
Marvin Goodfriend(
)
10 editions published in 2005 in English and held by 85 WorldCat member libraries worldwide
Using a simple modern macroeconomic model, we argue that the real effects of the Volcker disinflation in the early 1980s were mainly due to imperfect credibility, evident in volatility and stubbornness of longterm interest rates. Studying recently released transcripts of the Federal Open Market Committee, we find  to our surprise  that Volcker and other FOMC members also regarded longterm interest rates as key indicators of inflation expectations and of their disinflationary policy's credibility. We also consider the interplay of monetary targets, operating procedures, and credibility during the Volcker disinflation
10 editions published in 2005 in English and held by 85 WorldCat member libraries worldwide
Using a simple modern macroeconomic model, we argue that the real effects of the Volcker disinflation in the early 1980s were mainly due to imperfect credibility, evident in volatility and stubbornness of longterm interest rates. Studying recently released transcripts of the Federal Open Market Committee, we find  to our surprise  that Volcker and other FOMC members also regarded longterm interest rates as key indicators of inflation expectations and of their disinflationary policy's credibility. We also consider the interplay of monetary targets, operating procedures, and credibility during the Volcker disinflation
Stochastic trends and economic fluctuations by
Robert G King(
)
13 editions published between 1987 and 1992 in English and held by 75 WorldCat member libraries worldwide
Recent developments in macroeconomic theory emphasize that transient economic fluctuations can arise as responses to changes in long run factors  in particular, technological improvements  rather than short run factors. This contrasts with the view that short run fluctuations and shifts in long run trends are largely unrelated. We examine empirically the effect of shifts in stochastic trends that are common to several macroeconomic series. Using a linear time series model related to a VAR, we consider first a system with GNP, consumption and investment with a single common stochastic trend; we then examine this system augmented by money and prices and an additional stochastic trend. Our results suggest that movements in the "real" stochastic trend account for onehalf to twothirds of the variation in postwar U.S. GNP
13 editions published between 1987 and 1992 in English and held by 75 WorldCat member libraries worldwide
Recent developments in macroeconomic theory emphasize that transient economic fluctuations can arise as responses to changes in long run factors  in particular, technological improvements  rather than short run factors. This contrasts with the view that short run fluctuations and shifts in long run trends are largely unrelated. We examine empirically the effect of shifts in stochastic trends that are common to several macroeconomic series. Using a linear time series model related to a VAR, we consider first a system with GNP, consumption and investment with a single common stochastic trend; we then examine this system augmented by money and prices and an additional stochastic trend. Our results suggest that movements in the "real" stochastic trend account for onehalf to twothirds of the variation in postwar U.S. GNP
Discretionary policy and multiple equilibria by
Robert G King(
)
10 editions published in 2006 in English and held by 74 WorldCat member libraries worldwide
Discretionary policymaking can foster strategic complementarities between private sector decisions, thus leading to multiple equilibria. This article studies a simple example, originating with Kydland and Prescott, of a government which must decide whether to build a dam to prevent adverse effects on floods on the incomes of residents of a floodplain. In this example, it is socially inefficient to build the dam and for people to live on the floodplain, with this outcome being the unique equilibrium under policy commitment. Under discretion, there are two equilibria. First, if agents believe that few of their fellow citizens will move to the floodplain, then they know that the government will choose not to build the dam and there is therefore no incentive for any individual to locate on the floodplain. Second, if agents believe that there will be many floodplain residents, then they know that the government will choose to build the dam and even small benefits of living on the floodplain will lead them to choose that location. In this second equilibrium, all individuals are worse off
10 editions published in 2006 in English and held by 74 WorldCat member libraries worldwide
Discretionary policymaking can foster strategic complementarities between private sector decisions, thus leading to multiple equilibria. This article studies a simple example, originating with Kydland and Prescott, of a government which must decide whether to build a dam to prevent adverse effects on floods on the incomes of residents of a floodplain. In this example, it is socially inefficient to build the dam and for people to live on the floodplain, with this outcome being the unique equilibrium under policy commitment. Under discretion, there are two equilibria. First, if agents believe that few of their fellow citizens will move to the floodplain, then they know that the government will choose not to build the dam and there is therefore no incentive for any individual to locate on the floodplain. Second, if agents believe that there will be many floodplain residents, then they know that the government will choose to build the dam and even small benefits of living on the floodplain will lead them to choose that location. In this second equilibrium, all individuals are worse off
Sticky prices, money and business fluctuations by
Joseph G Haubrich(
Book
)
7 editions published between 1983 and 1990 in English and held by 70 WorldCat member libraries worldwide
Can nominal contracts make a difference for the neutrality of money if these arise endogenously in general equilibrium? This paper utilizes aversion of Lucas's seminal equilibrium business cycle theory to address this question. However, we depart from Lucas in assuming that (1) agents have complete information about the money stock; (ii) fundamental shocks to the system are purely redistributive and private information; and (iii) moral hazard precludes conventional insurance markets. With an exogenous restriction on contracts, money is fully neutral. But, when this restrictionis lifted, efficient risksharing between suppliers and demanders leads to a potential nonneutralitv of money. In particular, if an increase in the money growth rate signals a rise in the dispersion of shocks to demanders' wealth, then prices adjust only partially to monetary shocks and there is a positive association between money and output
7 editions published between 1983 and 1990 in English and held by 70 WorldCat member libraries worldwide
Can nominal contracts make a difference for the neutrality of money if these arise endogenously in general equilibrium? This paper utilizes aversion of Lucas's seminal equilibrium business cycle theory to address this question. However, we depart from Lucas in assuming that (1) agents have complete information about the money stock; (ii) fundamental shocks to the system are purely redistributive and private information; and (iii) moral hazard precludes conventional insurance markets. With an exogenous restriction on contracts, money is fully neutral. But, when this restrictionis lifted, efficient risksharing between suppliers and demanders leads to a potential nonneutralitv of money. In particular, if an increase in the money growth rate signals a rise in the dispersion of shocks to demanders' wealth, then prices adjust only partially to monetary shocks and there is a positive association between money and output
Real business cycles and the test of the Adelmans by
Robert G King(
)
8 editions published in 1989 in English and held by 67 WorldCat member libraries worldwide
Abstract: model corresponded to the KleinGoldberger equations. In our case, the model
8 editions published in 1989 in English and held by 67 WorldCat member libraries worldwide
Abstract: model corresponded to the KleinGoldberger equations. In our case, the model
Public policy and economic growth : developing neoclassical implications by
Robert G King(
)
8 editions published in 1990 in English and held by 64 WorldCat member libraries worldwide
Abstract: term growth rates? This paper examines the hypothesis that the answer lies in
8 editions published in 1990 in English and held by 64 WorldCat member libraries worldwide
Abstract: term growth rates? This paper examines the hypothesis that the answer lies in
Transitional dynamics and economic growth in the neoclassical model by
Robert G King(
)
8 editions published between 1989 and 1995 in English and held by 62 WorldCat member libraries worldwide
Abstract: example, the implications resurface in counterfactual variations in Tobin's Q
8 editions published between 1989 and 1995 in English and held by 62 WorldCat member libraries worldwide
Abstract: example, the implications resurface in counterfactual variations in Tobin's Q
The Great Inflation drift by
Marvin Goodfriend(
)
8 editions published in 2009 in English and held by 60 WorldCat member libraries worldwide
A standard statistical perspective on the U.S. Great Inflation is that it involves an increase in the stochastic trend rate of inflation, defined as the longterm forecast of inflation at each point in time. That perspective receives support from two sources: the behavior of longterm interest rates which are generally supposed to contain private sector forecasts, and statistical studies of U.S. inflation dynamics. We show that a textbook macroeconomic model delivers such a stochastic inflation trend, when there are shifts in the growth rate of capacity output, under two behavioral hypotheses about the central bank: (i) that it seeks to maintain output at capacity; and (ii) that it seeks to maintain continuity of the shortterm interest rate. The theory then identifies major upswings in trend inflation with unexpectedly slow growth of capacity output. We interpret the rise of inflation in the U.S. from the perspective of this simple macroeconomic framework
8 editions published in 2009 in English and held by 60 WorldCat member libraries worldwide
A standard statistical perspective on the U.S. Great Inflation is that it involves an increase in the stochastic trend rate of inflation, defined as the longterm forecast of inflation at each point in time. That perspective receives support from two sources: the behavior of longterm interest rates which are generally supposed to contain private sector forecasts, and statistical studies of U.S. inflation dynamics. We show that a textbook macroeconomic model delivers such a stochastic inflation trend, when there are shifts in the growth rate of capacity output, under two behavioral hypotheses about the central bank: (i) that it seeks to maintain output at capacity; and (ii) that it seeks to maintain continuity of the shortterm interest rate. The theory then identifies major upswings in trend inflation with unexpectedly slow growth of capacity output. We interpret the rise of inflation in the U.S. from the perspective of this simple macroeconomic framework
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Related Identities
 National Bureau of Economic Research
 Goodfriend, Marvin Author
 Wolman, Alexander L.
 Rebelo, Sergio Editor
 Baxter, Marianne 1956 Author
 Jones, Randall Author
 Klein, Michael W. 1958
 Dotsey, Michael Author
 Khan, Aubhik Author
 Watson, Mark W. Honoree Editor
Associated Subjects
Asia Banks and banking Banks and bankingState supervision Business cycles Business cyclesEconometric models China ChinaHong Kong Commerce Consumer goods DamsEconomic aspects Deflation (Finance) Deflation (Finance)Econometric models East Asia Econometric models Economic development Economic developmentMathematical models Economic history Economic policy Elasticity (Economics) Equilibrium (Economics) Fiscal policy Inflation (Finance) Inflation (Finance)Econometric models Inflation (Finance)Mathematical models Interest rates International economic integration International economic relations Monetary policy Monetary policyEconometric models Monetary policyMathematical models Money Multivariate analysisMathematical models Neoclassical school of economics Neoclassical school of economicsMathematical models OECD countries Pacific Area Phillips curveEconometric models Price maintenance Price regulation Prices PricesEconometric models Production functions (Economic theory) Random variablesMathematical models Saving and investmentGovernment policy Supplyside economics Taiwan TechnologyEconomic aspects Timeseries analysis United States Volcker, Paul A