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What We Know and Do Not Know About the Natural Rate of Unemployment
Blanchard, Olivier J.; Katz, Lawrence F. - 2021
Over the past three decades, a large amount of research has attempted to identify the determinants of the natural rate of unemployment. It is this body of work we assess in this paper. We reach two main conclusions. First, there has been considerable theoretical progress over the past 30 years....
Persistent link: https://www.econbiz.de/10013313236
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The Role of Demand Management in the Maintenance of Full Employment
McCallum, Bennett T. - 2021
This paper begins by identifying nominal price stickiness as the logical basis for the Keynesian or activist point of view concerning demand management policy. It then characterizes two alternative approaches to policy analysis that have been adopted by adherents of the Keynesian position, the...
Persistent link: https://www.econbiz.de/10013227003
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Estimating Time Preferences from Convex Budgets
Andreoni, James - 2010
Experimentally elicited discount rates are frequently higher than what one would infer from market interest rates and seem unreasonable for economic decision-making. Such high rates have often been attributed to present bias and hyperbolic discounting. A commonly recognized bias of standard...
Persistent link: https://www.econbiz.de/10013138321
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Choosing Size of Government Under Ambiguity : Infrastructure Spending and Income Taxation
Manski, Charles F. - 2012
Attempting to shed light on the optimal size of government, economists have analyzed planning problems that specify a set of feasible taxation-spending policies and a social welfare function. The analysis characterizes the optimal policy choice of a planner who knows the welfare achieved by each...
Persistent link: https://www.econbiz.de/10013104080
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The Macroeconomics of a Pandemic : A Minimalist Model
Céspedes, Luis Felipe - 2020
We build a minimalist model of the macroeconomics of a pandemic, with two essential components. The first is productivity-related: if the virus forces firms to shed labor beyond a certain threshold, productivity suffers. The second component is a credit market imperfection: because lenders...
Persistent link: https://www.econbiz.de/10012833117
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Insulation of Pensions from Political Risk
Diamond, Peter A. - 2006
There are many sources of political risk to public provision of pensions. This paper analyzes legislation to alter the retirement income system. This approach naturally recognizes that some changes in the system are good responses to social risks, while others generate such risks. Thus the...
Persistent link: https://www.econbiz.de/10012783964
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Intertemporal Distortions in the Second Best
Albanesi, Stefania - 2010
This paper studies the long run properties of intertemporal distortions in a broad class of second best economies. Our unified framework encompasses and extends many well known models, such as variants of the Ramsey taxation model with aggregate or idiosyncratic risk, and economies with...
Persistent link: https://www.econbiz.de/10012759663
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Separation of Powers and the Budget Process
Grossman, Gene M. - 2010
We study budget formation in a model featuring separation of powers. In our model, the legislature designs a budget bill that can include a cap on total spending and earmarked allocations to designated public projects. Each project provides random benefits to one of many interest groups. The...
Persistent link: https://www.econbiz.de/10012761271
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Future Rent-Seeking and Current Public Savings
Caballero, Ricardo J. - 2008
The conventional wisdom is that politicians' rent-seeking motives increase public debt and deficits. This is because myopic politicians face political risk and prefer to extract political rents as early as possible. An implication of this argument is that governments will under-save during a...
Persistent link: https://www.econbiz.de/10012769645
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The Fallacy of the Fiscal Theory of the Price Level
Buiter, Willem H. - 2021
or unsound argument'. The 'fiscal theory of the price level', recently re-developed by Woodford, Cochrane, Sims and … proponents of the fiscal theory of the price level do not accept the fundamental proposition that the government's intertemporal …. Policy conclusions could be drawn from the fiscal theory of the price level that would be harmful if they influenced the …
Persistent link: https://www.econbiz.de/10013223568