663 research outputs found
Factor-adjustment costs at the industry level
An estimation of a dynamic cost function for the U.S. steel industry to investigate the cost of adjusting blue- and white-collar employment levels and to examine the importance of specification of the adjustment-cost function.Industries ; Steel industry and trade
Intertemporal substitution and the role of monetary policy: policy irrelevance once again
Recently Marini (1985) demonstrates that a policy rule with proportional feedback to the current money stock from disturbances dated t-2 or further in the past will be effective at stabilizing output in Barro's (1976) model. This paper questions the robustness and logical consistency of Marini's result. It demonstrates that Marini's claim is overturned when the length of private agents's horizons does not fall short of the length of the lags in the feedback rule, so that private agents correctly incorporate knowledge of the wealth they will receive from future transfers into their decision calculus. Marini assumes that private agents ignore a foreseeable source of change in future money balances. This questionable feature of his analysis is crucial to the policy effectiveness results he obtains.Monetary policy
A primer on cointegration with an application to money and income
Money theory ; Income ; Cointegration
Revisionist Economic History? Potential GDP in the United States
EconomicGrowth_Development_TechnicalChangeU.S. Gross Domestic Product (GDP) has finally caught up with the Congressional Budget Office (CBO) estimates of potential GDP as of late 2017, even though the National Bureau of Economic Research dates the end of the Great Recession in 2009. This has been a widely recognized long slow recovery back to ‘full employment.’ What is less widely recognized is that this catch-up of actual GDP with potential GDP has occurred as much from CBO downward revisions of its estimates of potential GDP as from growth in actual GDP. Real time projections of potential and actual GDP given by the Congressional Budget Office to policymakers widely underestimated the severity of the recession and overestimated the U.S. economy’s ability to recover. These errors have real-time implications: policymakers used these estimates to assess the level of stimulus needed to boost the economy. This report examines CBO estimates of potential GDP, including estimates of historical values and forecasts of future values, and documents how the CBO continued to revise downward its potential GDP estimates for years after the end of the Great Recession. These CBO revisions were changes in both forecasts of future potential GDP values and estimates of past values of potential GDP. The authors also examine the behavior of factors contributing to the CBO revisions, including changes in the labor force participation rate
Texas: Leading the Way on Wind Power
EconomicGrowth_Development_TechnicalChangeWind power is a growing source for electricity generation in the United States, and wind power now providing over 6% of our electricity. In Texas wind is responsible for 15% of electricity production, and Texas produces 25% of all the wind-generated electricity in the USA. In this issue of Data Points, authors Kyle Iverson and Dennis W. Jansen compare the largest producers of wind energy by state and by production source, as well as identify the benefits and challenges associated with the properties and process of wind energy generation
Portfolio Choice in the Model of Expected Utility with a Safety-First Component
PublicFinanceWhereas the majority of economists interpret risk as dispersion or variation in an outcome variable, many everyday decision makers tend to associate risk with the outcome failing to meet a certain “safety� level. In this model, a decision maker’s concern about the final wealth distribution per se is captured by the expected utility of the final wealth, and his concern about meeting a safety wealth level is captured by the probability of final wealth exceeding the safety level. The model finds that a positive expected excess return remains sufficient for investing a positive amount in the risky asset except in the special situation where the safety wealth level coincides with the wealth obtained when the entire initial wealth is invested in the riskless asset
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