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This monograph is devoted to the analysis of the dynamics of business cycles and stabilization policies. The analysis is conducted in models of the AS-AD type, focusing on involuntary unemployment and capital accumulation. Major conclusions are the following. (1) Sectoral imbalances, once emphasized by such business-cycle theorists as K. Marx, A. Spiethoff, and F.A. Hayek, are rectified in finite time by competitive investment allocation, leaving aggregate variables as the main variables of business cycle dynamics. (2) The chronology of events during a cycle is established, which resolves the so-called real wage puzzle. (3) Owing to the crowding-out effect on investment, fiscal stabilization policies can destabilize the business cycle dynamics if implemented too intensively. (4) If coordinated properly, monetary stabilization policies can remove the destabilizing tendency of fiscal stabilization policies.

Preface -- Contents -- About the Author -- List of Figures -- 1 An Aggregative Model of Unemployment, Cycles, and Growth -- 1.1 Introduction -- 1.2 Static Structure of the Model -- 1.2.1 Goods Market -- 1.2.2 Labor Market -- 1.2.3 Asset Markets -- 1.2.4 Quasi Short-Run Equilibrium -- 1.3 Dynamic Equations -- 1.3.1 Some Dynamic Assumptions -- 1.3.2 Change of Variables -- 1.3.3 Dynamic Equations -- 1.4 Long-Run Equilibrium -- 1.4.1 Existence and Uniqueness -- 1.4.2 Saddle-Point Stability -- 1.5 Movements on the Stable Manifold -- 1.6 Cyclical Movements -- 1.7 Conclusions -- Appendix -- A.1 Some Mathematical Expressions -- A.1.1 Comparative Statics -- A.1.2 Coefficients of the Linear Dynamic System -- A.1.3 Coefficients of the Characteristic Polynomial -- A.2 Proof of Theorem 2 -- A.3 ∂e/∂k and ∂e/∂w -- A.4 Proof of Theorem 3 -- 2 A Hicksian Two-Sector Model of Cycles and Growth -- 2.1 Introduction -- 2.2 Static Structure of the Model -- 2.3 Quasi Short-Run Equilibrium -- 2.4 Dynamic Equations, Dynamic Inclusions, Long-Run Equilibrium, and Saddle-Point Stability -- 2.5 Investment Allocation and the Sectoral Balance -- 2.6 Saddle-Point Stability of System II -- 2.7 Cycles -- 2.8 Conclusions -- Appendix -- A.1 Proof of Lemma 11 -- A.2 Some Mathematical Expressions Relating to the Balanced Stage -- A.2.1 Comparative Statics -- A.2.2 Coefficients of the Linear System -- A.2.3 Coefficients of the Characteristic Polynomial -- A.3 Proof of Theorem 12 -- A.4 Proof of Lemma 13 -- A.5 Proof of Theorem 14 -- A.6 Proof of (2.47) -- 3 Stabilization Policies and Business Cycle Dynamics -- 3.1 Introduction -- 3.2 The Base Model -- 3.2.1 The Static Structure -- 3.2.2 Dynamics -- 3.3 Balanced-Budget Fiscal Stabilization Policy -- 3.3.1 Static Structure -- 3.3.2 Dynamics -- 3.4 Partially Debt-Financed Fiscal Stabilization Policy -- 3.4.1 Static Structure

When the choice of the nominal anchor and timing of inflation stabilization is analyzed with models of political business cycles, there is room for political opportunism of policymakers. The different business cycles associated with exchange rate-based (ERBS) and money-based stabilizations (MBS) imply that the decision regarding the timing and nominal anchor of stabilization may be affected by the timing of elections. Namely, an opportunistic policymaker is more likely to implement an ERBS than a MBS before elections, while the opposite happens after elections. Empirical results obtained when estimating a multinomial logit model for a sample of 35 stabilization programs implemented in chronic inflation countries clearly support this hypothesis. ; Fundação para a Ciência e Tecnologia ...

This article analyzes the effects of the timing of elections on the timing and character of adopted inflation stabilization plans. Multinomial logit estimations show that before elections exchange rate-based stabilizations are more likely to be implemented than money-based stabilizations, while the opposite is more likely after elections. ; http://www.sciencedirect.com/science/article/B6V84-4BJ783V-3/1/0ad181be9e1e4620e8eef8f5721807b0

This article analyzes the effects of the timing of elections on the timing and character of adopted inflation stabilization plans. Multinomial logit estimations show that before elections exchange rate-based stabilizations are more likely to be implemented than money-based stabilizations, while the opposite is more likely after ...

We study the effects of fiscal policy rules on the determinacy of rational expectations equilibrium in a perfectly competitive monetary model with constant returns. Government spending implies a distortion of the monetary steady state due to the implied taxation. We show that policy rules that let the GNP share of government spending sufficiently negatively on increases in GNP stabilize the economy with respect to endogenous fluctuations for arbitrarily little distortion of the steady state of which stabilization occurs. The rules do not involve lump sum taxation, negative income taxation, or exact knowledge of the economy's laissez faire steady state. (JEL E32 and E63 - Keywords: Endogenous business cycles, stabilization policy - Running title: Endogenous Fluctuations and Stabilization Policy)

We study the effects of stylized fiscal policy rules on the (global) determinacy of rational expectations equilibrium in perfectly competitive monetary model with constant returns to scale and labor as the unique input. Government spending on transfers and/or demand implies a distortion of the mnetary steady state due to the implied income or inflationary taxation. We show that policy rules for which the GNP share of government spending depends sufficiently negatively on increases in GNP can stabilize the economy with respect to endogenous fluctuations for an arbitrarily small level of distortion of the steady state at which stabilization occurs. These policy rules do not involve features such as positive lump sum taxation, negative income taxation, or exact knowledge of the economy's laissez faire steady state.

Cet article se veut une contribution aux débats actuels sur l'efficience des politiques de stabilisation économique à travers l'analyse de la conception de Minsky des cycles d'affaires dans ses tout premiers travaux à la fin des années 1950. Le propos de l'article se décline en trois étapes. Premièrement, il s'est agi de déterminer comment la conception des cycles économique chez Minsky a été influencée par des modèles non linéaires avec plancher et plafond développés par Hicks dans les années 1950. Nous pensons que ces modèles fournissent un cadre théorique adéquat à l'analyse minskyenne des politiques de stabilisation qui agissent comme des « systèmes de régulation » dont le but est de contrecarrer et contenir l'amplitude naturellement explosive des fluctuations économiques. De surcroît, ils permettent une meilleure compréhension de sa théorie de l'instabilité financière. Contrairement à l'interprétation largement répandue, l'hypothèse de l'instabilité financière de Minsky ne peut se réduire à une conception endogène et financière des fluctuations économiques fondée uniquement sur le comportement des agents économiques privés : les pouvoirs publics, à travers les politiques de stabilisation, jouent aussi un rôle central dans l'explication de la forme des cycles économiques (section 2). Deuxièmement, le rôle central joué par les banques dans l'analyse des fluctuations chez Minsky est souligné. Nous mettons l'accent sur le fait que le comportement des banques est essentiellement guidé par une recherche permanente d'opportunités de profit dans la tradition d'auteurs comme Tobin et Schumpeter. Cet aspect est primordial pour comprendre la conception des cycles d'affaires de Minsky puisqu'il fournit une explication de la manière dont les comportements des banques affaiblissent l'efficience des politiques de stabilisation et, en conséquence, la forme des fluctuations économiques (section 3). La troisième étape (section 4) évalue la pertinence de l'approche de Minsky pour comprendre les récentes politiques de stabilisation pré- et post-crise.

This paper develops a model to study the design, characterization and dynamic implications of stabilization policies in a dynamic general equilibrium model of the business cycle for an economy tainted by the Dutch disease. The model incorporates a stabili