We test a Federal Reserve reaction function for threshold effects among the Fed's policy objectives. We find evidence that the Fed responds with greater intensity to a policy objective when that policy objective moves beyond acceptable bounds. We also find that the Fed only responds to lesser...

A number of empirical studies have failed to find a significant relationship between deficits and interest rates. This "non-finding" has become something of a stylized fact among many economists and is often cited as evidence of the validity of the Ricardian equivalence theorem. In this paper we...

Although Ricardo may be the first to give a numerical demonstration of debt neutrality, we argue that he is not the first to explore the concept. In particular, we contend that Adam Smith presents many of the same arguments as Ricardo. Moreover, Smith frames the equivalence issue in the same...

In this paper I confess the following sin: I deliberately complicated a piece of research to advance its prospects of being published.

The real wage is acyclical. This fact is inconsistent with standard theories which assume a single shock drives the cycle and predict either a strong pro or countercyclical real wage. This paper tests the hypothesis that the real wage is acyclical because there are several shocks, some with...