Improvements in Macroeconomic Stability: The Role of Wages and Prices / John B. Taylor.

Format:

Book

Author/Creator:

Taylor, John B.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1491.

NBER working paper series no. w1491

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Improvements in Macroeconomic Stability

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1984.

Summary:

This paper compares macroeconomic performance in the United States from 1891 through 1914 with the period after the Second World War by estimating reduced form autoregressions for prices, wages and output, by looking at their moving average representations, and by giving them simple structural interpretations. The results show that the impulses to the economic system were smaller in the later period, but the propagation mechanisms are much slower and more drawn out. The smaller shocks are therefore translated into larger and more prolonged fluctuations in output and inflation than would occur if the earlier dynamics were applicable in the later period. A tentative explanation for the changes in the dynamics is a slower speed of wage and price adjustment combined with a different accommodative stance for the monetary system.

Notes:

Print version record

November 1984.