Search Results
Journal Article
Two perspectives on growth and taxes
Journal Article
Commentary on \\"Monetary policy as equilibrium selection\\"
Working Paper
Irrational expectations and econometric practice: discussion of Orphanides and Williams, \"Inflation scares and forecast-based monetary policy\"
Athanasios Orphanides and John C. Williams' excellent conference paper, "Inflation Scares and Forecast-Based Monetary Policy," contributes importantly to the new and rapidly growing branch of the literature on bounded rationality and learning in macroeconomics. Their paper, like many others, derives interesting and useful theoretical results that show how the introduction of bounded rationality and learning impacts on the effects of monetary policy shocks and the characteristics of optimal monetary policy rules. This note suggests that some additional empirical work-some "irrational ...
Working Paper
Endogenous financial innovation and the demand for money
This paper embeds two key ideas about the nature of financial innovation taken from the empirical literature into a familiar equilibrium monetary model. It provides formal support for several alternative econometric specifications for money demand that attempt to capture the effects of financial innovation and demonstrates that a popular theoretical model of money demand, when suitably modified, can account for some unusual monetary dynamics found in the data. Thus, it helps to establish both the theoretical relevance of recent empirical work and the empirical relevance of recent theoretical ...
Working Paper
Stopping inflations, big and small
Previous studies of disinflation work with models in which firms use time-dependent strategies, changing nominal prices at intervals of fixed length. These models may be criticized for failing to allow pricing behavior to adjust after a large shift in policy regime. Consequently, this paper develops a model that allows firms to adopt strategies that are partially state-dependent, changing nominal prices whenever they deviate sufficiently from their target values. The paper uses this model to examine how the welfare costs and benefits of disinflation vary with the initial inflation rate and ...
Journal Article
Price stability under long-run monetary targeting
Journal Article
Forecasting the effects of reduced defense spending
Forecasts from a vector autoregressive model indicate that the substantial cuts in defense spending proposed by the Bush Administration in 1991 are likely to reduce GNP in both the short run and the long run. These forecasts hold even if proceeds from the spending cuts are used to reduce the federal debt. The long-range VAR forecasts, in particular, contrast markedly with those of the large-scale econometric models employed by the Congressional Budget Office.
Journal Article
Financial evolution and the long-run behavior of velocity : new evidence from U.S. regional data
Innovations in the private financial sector influence the income velocity of money in an economy over the entire course of its development. In the early stages of growth, increased monetization, as manifested by the spread of the banking system, causes velocity to fall. Later, the emergence of nonbank financial intermediaries causes velocity to rise. Evidence of these patterns is found in regional demand deposit data from the United States.
Working Paper
Liquidity effects and transactions technologies
Recently there has been renewed interest in using general equilibrium models to understand the effects of monetary policy on interest rates and real economic activity. This research effort involved the search for models that will account for the liquidity effects--the decrease in short-term interest rates and the increase in output and employment--that are associated with expansionary monetary policy.
Conference Paper
Liquidity effects and transactions technologies