Putting The New Keynesian Model To A Test
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| Author | : Michel De Vroey |
| Publisher | : Cambridge University Press |
| Total Pages | : 451 |
| Release | : 2016-01-08 |
| Genre | : Business & Economics |
| ISBN | : 0521898439 |
This book retraces the history of macroeconomics from Keynes's General Theory to the present. Central to it is the contrast between a Keynesian era and a Lucasian - or dynamic stochastic general equilibrium (DSGE) - era, each ruled by distinct methodological standards. In the Keynesian era, the book studies the following theories: Keynesian macroeconomics, monetarism, disequilibrium macro (Patinkin, Leijongufvud, and Clower) non-Walrasian equilibrium models, and first-generation new Keynesian models. Three stages are identified in the DSGE era: new classical macro (Lucas), RBC modelling, and second-generation new Keynesian modeling. The book also examines a few selected works aimed at presenting alternatives to Lucasian macro. While not eschewing analytical content, Michel De Vroey focuses on substantive assessments, and the models studied are presented in a pedagogical and vivid yet critical way.
| Author | : Roland Straub |
| Publisher | : International Monetary Fund |
| Total Pages | : 36 |
| Release | : 2006-05 |
| Genre | : Business & Economics |
| ISBN | : |
In recent years, New Keynesian dynamic stochastic general equilibrium (NK DSGE) models have become increasingly popular in the academic literature and in policy analysis. However, the success of these models in reproducing the dynamic behavior of an economy following structural shocks is still disputed. This paper attempts to shed light on this issue. We use a VAR with sign restrictions that are robust to model and parameter uncertainty to estimate the effects of monetary policy, preference, government spending, investment, price markup, technology, and labor supply shocks on macroeconomic variables in the United States and the euro area. In contrast to the NK DSGE models, the empirical results indicate that technology shocks have a positive effect on hours worked, and investment and preference shocks have a positive impact on consumption and investment, respectively. While the former is in line with the predictions of Real Business Cycle models, the latter indicates the relevance of accelerator effects, as described by earlier Keynesian models. We also show that NK DSGE models might overemphasize the contribution of cost-push shocks to business cycle fluctuations while, at the same time, underestimating the importance of other shocks such as changes to technology and investment adjustment costs.
| Author | : John Maynard Keynes |
| Publisher | : Atlantic Publishers & Dist |
| Total Pages | : 410 |
| Release | : 2016-04 |
| Genre | : Business & Economics |
| ISBN | : 9788126905911 |
John Maynard Keynes is the great British economist of the twentieth century whose hugely influential work The General Theory of Employment, Interest and * is undoubtedly the century's most important book on economics--strongly influencing economic theory and practice, particularly with regard to the role of government in stimulating and regulating a nation's economic life. Keynes's work has undergone significant revaluation in recent years, and "Keynesian" views which have been widely defended for so long are now perceived as at odds with Keynes's own thinking. Recent scholarship and research has demonstrated considerable rivalry and controversy concerning the proper interpretation of Keynes's works, such that recourse to the original text is all the more important. Although considered by a few critics that the sentence structures of the book are quite incomprehensible and almost unbearable to read, the book is an essential reading for all those who desire a basic education in economics. The key to understanding Keynes is the notion that at particular times in the business cycle, an economy can become over-productive (or under-consumptive) and thus, a vicious spiral is begun that results in massive layoffs and cuts in production as businesses attempt to equilibrate aggregate supply and demand. Thus, full employment is only one of many or multiple macro equilibria. If an economy reaches an underemployment equilibrium, something is necessary to boost or stimulate demand to produce full employment. This something could be business investment but because of the logic and individualist nature of investment decisions, it is unlikely to rapidly restore full employment. Keynes logically seizes upon the public budget and government expenditures as the quickest way to restore full employment. Borrowing the * to finance the deficit from private households and businesses is a quick, direct way to restore full employment while at the same time, redirecting or siphoning
| Author | : Jordi Galí |
| Publisher | : Princeton University Press |
| Total Pages | : 295 |
| Release | : 2015-06-09 |
| Genre | : Business & Economics |
| ISBN | : 1400866278 |
The classic introduction to the New Keynesian economic model This revised second edition of Monetary Policy, Inflation, and the Business Cycle provides a rigorous graduate-level introduction to the New Keynesian framework and its applications to monetary policy. The New Keynesian framework is the workhorse for the analysis of monetary policy and its implications for inflation, economic fluctuations, and welfare. A backbone of the new generation of medium-scale models under development at major central banks and international policy institutions, the framework provides the theoretical underpinnings for the price stability–oriented strategies adopted by most central banks in the industrialized world. Using a canonical version of the New Keynesian model as a reference, Jordi Galí explores various issues pertaining to monetary policy's design, including optimal monetary policy and the desirability of simple policy rules. He analyzes several extensions of the baseline model, allowing for cost-push shocks, nominal wage rigidities, and open economy factors. In each case, the effects on monetary policy are addressed, with emphasis on the desirability of inflation-targeting policies. New material includes the zero lower bound on nominal interest rates and an analysis of unemployment’s significance for monetary policy. The most up-to-date introduction to the New Keynesian framework available A single benchmark model used throughout New materials and exercises included An ideal resource for graduate students, researchers, and market analysts
| Author | : Graham Elliott |
| Publisher | : Newnes |
| Total Pages | : 719 |
| Release | : 2013-08-23 |
| Genre | : Business & Economics |
| ISBN | : 0444536841 |
The highly prized ability to make financial plans with some certainty about the future comes from the core fields of economics. In recent years the availability of more data, analytical tools of greater precision, and ex post studies of business decisions have increased demand for information about economic forecasting. Volumes 2A and 2B, which follows Nobel laureate Clive Granger's Volume 1 (2006), concentrate on two major subjects. Volume 2A covers innovations in methodologies, specifically macroforecasting and forecasting financial variables. Volume 2B investigates commercial applications, with sections on forecasters' objectives and methodologies. Experts provide surveys of a large range of literature scattered across applied and theoretical statistics journals as well as econometrics and empirical economics journals. The Handbook of Economic Forecasting Volumes 2A and 2B provide a unique compilation of chapters giving a coherent overview of forecasting theory and applications in one place and with up-to-date accounts of all major conceptual issues. - Focuses on innovation in economic forecasting via industry applications - Presents coherent summaries of subjects in economic forecasting that stretch from methodologies to applications - Makes details about economic forecasting accessible to scholars in fields outside economics
| Author | : Ray C. Fair |
| Publisher | : Harvard University Press |
| Total Pages | : 462 |
| Release | : 1994 |
| Genre | : Business & Economics |
| ISBN | : 9780674875036 |
In this book Ray Fair expounds powerful techniques for estimating and analyzing macroeconometric models. He takes advantage of the remarkable decrease in computational costs that has occurred since the early 1980s by implementing such sophisticated techniques as stochastic simulation. Testing Macroeconometric Models also incorporates the assumption of rational expectations in the estimation, solution, and testing of the models. And it presents the latest versions of Fair's models of the economies of the United States and other countries. After estimating and testing the U.S. model, Fair analyzes its properties, including those relevant to economic policymakers: the optimal monetary policy instrument, the effect of a government spending reduction on the government deficit, whether monetary policy is becoming less effective over time, and the sensitivity of policy effects to the assumption of rational expectations. Ray Fair has conducted research on structural macroeconometric models for more than twenty years. With interest increasing in the area, this book will be an essential reference for macroeconomists.
| Author | : Sheila C. Dow |
| Publisher | : Edward Elgar Publishing |
| Total Pages | : 296 |
| Release | : 2002 |
| Genre | : Business & Economics |
| ISBN | : |
While the first conference (1993) focused on methodological issues, the 13 papers of the second are more concerned with developments in theory, empirical work, and policy questions as they seek to carry on the insights of economist John Maynard Keynes into and through the 1990s. Among the themes are the relationship between microeconomic and macroeconomic levels, uncertainty and its implications for individual behavior as it underpins macroeconomic behavior, and applying post- Keynesian theory to policy questions particularly in the international arena. The proceedings of the first conference were published under a separate title, and this series begins Volume One with the second conference. Annotation copyrighted by Book News, Inc., Portland, OR
| Author | : M.T. Belongia |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 248 |
| Release | : 2012-12-06 |
| Genre | : Business & Economics |
| ISBN | : 9401129568 |
These proceedings, from a conference held at the Federal Reserve Bank of St. Louis on October 17-18, 1991, attempted to layout what we currently know about aggregate economic fluctuations. Identifying what we know inevitably reveals what we do not know about such fluctuations as well. From the vantage point of where the conference's participants view our current understanding to be, these proceedings can be seen as suggesting an agenda for further research. The conference was divided into five sections. It began with the formu lation of an empirical definition of the "business cycle" and a recitation of the stylized facts that must be explained by any theory that purports to capture the business cycle's essence. After outlining the historical develop ment and key features of the current "theories" of business cycles, the conference evaluated these theories on the basis of their ability to explain the facts. Included in this evaluation was a discussion of whether (and how) the competing theories could be distinguished empirically. The conference then examined the implications for policy of what is known and not known about business cycles. A panel discussion closed the conference, high lighting important unresolved theoretical and empirical issues that should be taken up in future business cycle research. What Is a Business Cycle? Before gaining a genuine understanding of business cycles, economists must agree and be clear about what they mean when they refer to the cycle.
| Author | : Paul De Grauwe |
| Publisher | : Princeton University Press |
| Total Pages | : 152 |
| Release | : 2012-10-14 |
| Genre | : Business & Economics |
| ISBN | : 0691147396 |
6.2 Introducing Asset Prices in the Behavioral Model -- 6.3 Simulating the Model -- 6.4 Should the Central Bank Care about Stock Prices? -- 6.5 Inflation Targeting and Macroeconomic Stability -- 6.6 The Trade-off between Output and Inflation Variability -- 6.7 Conclusion -- 7 Extensions of the Basic Model -- 7.1 Fundamentalists Are Biased -- 7.2 Shocks and Trade-offs -- 7.3 Further Extensions of the Basic Model -- 7.4 Conclusion -- 8 Empirical Issues -- 8.1 Introduction -- 8.2 The Correlation of Output Movements and Animal Spirits -- 8.3 Model Predictions: Higher Moments -- 8.4 Transmission of Monetary Policy Shocks -- 8.5 Conclusion -- References -- Index
| Author | : John Baffes |
| Publisher | : World Bank Publications |
| Total Pages | : 311 |
| Release | : 2022-12-07 |
| Genre | : Business & Economics |
| ISBN | : 1464819122 |
Commodity markets are integral to the global economy. Understanding what drives developments of these markets is critical to the design of policy frameworks that facilitate the economic objectives of sustainable growth, inflation stability, poverty reduction, food security, and the mitigation of climate change. This study is the first comprehensive analysis examining market and policy developments for all commodity groups, including energy, metals, and agriculture, over the past century. It finds that, while the quantity of commodities consumed has risen enormously, driven by population and income growth, the relative importance of commodities has shifted over time, as technological innovation created new uses for some materials and facilitated substitution among commodities. The study also shows that commodity markets are heterogeneous in terms of their drivers, price behavior, and macroeconomic impact on emerging markets and developing economies, and that the relationship between economic growth and commodity demand varies widely across countries, depending on their stage of economic development. Policy frameworks that enable countercyclical macroeconomic responses have become increasingly common—and beneficial. Other policy tools have had mixed outcomes. Discussions about commodity-exporting emerging markets are often based on ideas without empirical or analytical support. This book is a great contribution to improve our understanding of those economies, based on rigorous research. It provides robust empirical evidence including a long-term perspective on commodity prices. It also contains very thoughtful policy analysis, with implications for resilience, macroeconomic policies, and development strategies. It will be a key reference for scholars as well as policy makers. José De Gregorio Dean of the School of Economics and Business Universidad de Chile Former Minister of Economy, Mining and Energy and Former Governor of the Central Bank of Chile A sound understanding of commodity markets is more essential than ever in light of the COVID-19 pandemic, the war in Ukraine, and the transition from fossil fuels to renewable energy commodities. This volume offers an excellent, comprehensive, and very timely analysis of the wide range of factors that affect commodity markets. It carefully surveys historical and future trends in commodity supply, demand, and prices, and offers detailed policy proposals to avoid the havoc that turbulent commodity markets can cause on the economies of commodity exporters and importers. Rick Van der Ploeg Research Director of Oxford Centre for the Analysis of Resource-Rich Economies University of Oxford
