Search results

"Real Business Cycle (RBC) Theory holds that random fluctuations in productivity are what causes the business cycle. Economists have come up with different models over the years which attempt to explain patterns in real business cycles, though the two which dominate proceedings are Kydland & Prescott's and Long & Plosser's models. The purpose of this book is to describe the intellectual process by which RBC models developed. The approach taken focuses on the core elements in the development of RBC models: (i) building blocks, (ii) catalysts, and (iii) meta-syntheses. This is done by detailed examination of all available unpublished variorum drafts of the key papers in the RBC story, so as to determine the origins of the ideas. The analysis of the process their discovery is then set out followed by explanations of the evolution and dissemination of the models, from first generation papers through full blown research programs. This is supplemented by interviews and correspondence with the individuals who were at the center of the development of RBC models, such as Kydland, Prescott, Long, Plosser, King, Lucas and Barro, among others. This book gets stright to the heart of the debates surrounding RBC models and as such contributes to a real assessment of their impact on modern macroeconomics. The volume, therefore, will interest all scholars looking at macroeconomics as well as historians of economic thought more generally"--

The purpose of this book is to describe the intellectual process by which Real Business Cycle models were developed. The approach taken focuses on the core elements in the development of RBC models: (i) building blocks, (ii) catalysts, and (iii) meta-syntheses. This is done by detailed examination of all available unpublished variorum drafts of the key papers in the RBC story, so as to determine the origins of the ideas. The analysis of the process their discovery is then set out followed by explanations of the evolution and dissemination of the models, from first generation papers through ful.

The volume is divided into three parts. Part one focuses on the models, men, and institutions involved in the development of the international macroeconomic model. In this section, the contributors examine the two monetary approaches to the balance of payments, as well as the relationship between long-term fluctuations in real exchange rates and inflation. Part two deals with the present state of the models by looking at Robert Mundell's theory of optimum currency areas (OCAs) and its relationship with key currencies. The chapters in this section also consider the impact of exchange rate variability on labor markets, as well as the interactions between theoretical developments and real-world behavior in the open economy macromodel. The third and last part of this volume provides a perspective on the future by looking at alternate models and institutional perspectives. Several contributors examine the relationship between asset prices, the real exchange rate, and unemployment in a small economy via what they call "a medium-run structuralist perspective". The future of institutional structures necessary to conduct international economic policy is the subject of the last chapters in part three of the volume

The 800 pound gorilla in the room of macroeconomics is the question of why the overlapping generations model didn't become the central workhorse model for macroeconomics. Introduced in 1958 by Paul Samuelson, the model postulates an infinite number of finite-lived families. This is in stark contrast to the more dominant neoclassical growth model, which is based on the assumption that real economies are populated by a finite number of dynastic families. Despite the greater realism of the former model and the inherent implausibility of the assumptions underlying the growth model, the growth model has become dominant. The authors here explore the co-evolution of the two models to shed light on why this happened, spanning the entire post-WWII era.

Intro -- Acknowledgments -- Contents -- 1 Introduction, Keynes's Own IS-LM Approach -- References -- 2 Prolog to Keynes's IS-LM, 1930 to 1932 -- 2.1 The Failure of A Treatise on Money -- 2.2 The Treatise and IS-LM: 1930 -- 2.3 Back to the Drawing Board: 1931 and 1932 -- References -- 3 The Advent of Keynes's IS-LM, 1933 -- 3.1 GTE/5/423 -- 3.2 The Monetary Theory of Employment -- 3.3 Mr. Keynes's Multiplier -- 3.4 The Marginal Efficiency of Capital -- 3.5 Keynes's 1933 Lectures -- References -- 4 "The Missing Link": Keynes's Own Lecture Notes, December 4, 1933, Impact and Implications -- 4.1 Keynes's Handwritten IS-LM Model: GTE/5/419 -- 4.2 GTE/5/419 Employment Equations -- 4.3 The Rashomon Effect -- References -- 5 Reconstructing Keynes's IS-LM Approach, 1931 to 1937 -- 5.1 1931 to 1933: A Review -- 5.2 The Mid-1934 Drafts -- 5.3 The Marginal Efficiency of Capital -- 5.4 Keynes's 1934 Lectures -- 5.5 1935: De-formalizing and Re-formalizing the General Theory -- 5.6 The General Theory: Extracting the IS-LM Model -- 5.7 Keynes's Verbal IS-LM Approach and QJE 1937 -- 5.8 De-formalization: Did Keynes "Do a Marshall?" -- References -- 6 Keynes's Equations and Early Post-General Theory IS-LM Models -- 6.1 Bryce, Champernowne, Reddaway, Harrod, and Meade -- 6.2 Hicks and Lange -- 6.3 Other Early IS-LM Models -- References -- 7 The Legacy of December 1933: Re-interpreting Mr. Keynes -- References -- Appendix -- Robert B. Bryce Notes: December 4, 1933 -- Alec Cairncross Notes: December 4, 1933 -- Marvin Fallgatter Notes: December 4, 1933 -- Walter Salant Notes: December 4, 1933 -- Lorie Tarshis Notes: December 4, 1933 -- Bryn Thring Notes: December 4, 1933 -- Index.

In Time Series Analysis and Adjustment the authors explain how the last four decades have brought dramatic changes in the way researchers analyze economic and financial data on behalf of economic and financial institutions and to provide statistics. An understanding of time series and the application and knowledge of related time series adjustment procedures is essential in areas such as risk management, business cycle analysis, and forecasting. The case studies in this book demonstrate that time series adjustment methods can be efficaciously applied and utilized, for both analysis and forecas.

IS-LM is perhaps the prime example of `cognitive dissonance' in economics, and is problematic to many economists. On the one hand, the IS-LM model is still taught by many academic economists or they use it to derive the AD-AS approach. On the other hand, the same economists realize the limitations of the basic IS-LM model and would not now use it for policy analysis, as they did in the past. The distinction between pedagogical and analytical efficacy is made by all the authors in this volume regarding the IS-LM model. Indeed, even those who would reject using the model for modern policy analysis still see the basic model as useful for teaching purposes. Moreover, in an augmented form, some of the authors in this volume would even see fit to use IS-LM for modern policy analysis. As will be seen, therefore, the IS-LM model is `not yet dead'. Rather, the model's `plasticity' has enabled it to undergo a metamorphosis into augmented form, enabling its continuing utilization in economics accordingly