Macroeconomics at the service of public policy / edited by Thomas J. Sargent, Jouko Vilmunen.

Format:

Book

Contributor:

Sargent, Thomas J.

Vilmunen, Jouko.

Language:

English

Subjects (All):

Macroeconomics.

Economic policy.

Physical Description:

xiii, 225 pages : illustrations ; 23 cm

Edition:

First edition.

Place of Publication:

Oxford : Oxford University Press, 2013.

Summary:

This volume uses state of the art models from the frontier of macroeconomics to answer key questions about how the economy functions and how policy should be conducted. The contributions cover a wide range of issues in macroeconomics and macroeconomic policy. They combine high level mathematics with economic analysis, and highlight the need to update our mathematical toolbox in order to understand the increased complexity of the macroeconomic environment. The volume represents hard evidence of high research intensity in many fields of macroeconomics, and warns against interpreting the scope of macroeconomics too narrowly. The mainstream business cycle analysis, based on dynamic stochastic general equilibrium (DSGE) modelling of a particular type, has been criticised for its inability to predict or resolve the recent financial crisis. However, macroeconomic research on financial, information, and learning imperfections had not yet made their way into many of the pre-crisis DSGE models, because practical econometric versions of those models were mainly designed to fit data periods that did not include financial crises. A major response to the limitations of those older DSGE models is an active research program to bring big financial shocks and various kinds of financial, learning, and labour market frictions into a new generation of DSGE models for guiding policy. This book utilises models and modelling assumptions that go beyond particular modelling conventions. It includes contributions on the market as a bearer of risk, the European debt crisis, and possible stagflation of the US economy. With contributions from two Nobel Laureates and many leading experts, this volume expands the frontier of macroeconomic knowledge in ways that will prove useful for macroeconomic policy. Book jacket.

Contents:

Part I Financial Crisis and Recovery

1 Is the Market System an Efficient Bearer of Risk? / Kenneth J. Arrow Arrow, Kenneth J. 17

2 The European Debt Crisis / Hans-Werner Sinn Sinn, Hans-Werner 24

3 The Stagnation Regime of the New Keynesian Model and Recent US Policy / George W. Evans Evans, George W. 36

Part II Learning, Incentives, and Public Policies

4 Notes on Agents' Behavioural Rules under Adaptive Learning and Studies of Monetary Policy / Seppo Honkapohja Honkapohja, Seppo, Kaushik Mitra Mitra, Kaushik, George W. Evans Evans, George W. 63

5 Learning and Model Validation: An Example / In-Koo Cho Cho, In-Koo, Kenneth Kasa Kasa, Kenneth 80

6 Bayesian Model Averaging, Learning, and Model Selection / George W. Evans Evans, George W., Seppo Honkapohja Honkapohja, Seppo, Thomas J. Sargent Sargent, Thomas J., Noah Williams Williams, Noah 99

7 History-Dependent Public Policies / David Evans Evans, David, Thomas J. Sargent Sargent, Thomas J. 120

8 Finite-Horizon Learning / William Branch Branch, William, George W. Evans Evans, George W., Bruce McGough McGough, Bruce 141

9 Regime Switching, Monetary Policy, and Multiple Equilibria / Jess Benhabib Benhabib, Jess 164

10 Too Many Dragons in the Dragons' Den / Martin Ellison Ellison, Martin, Chryssi Giannitsarou Giannitsarou, Chryssi 175

11 The Impacts of Labour Taxation Reform under Domestic Heterogenous Labour Markets and Flexible Outsourcing / Erkki Koskela Koskela, Erkki 186.

Notes:

Includes bibliographical references and index.

ISBN:

9780199666126

0199666121

OCLC:

812686142