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Taylor Contract (economics)
The Taylor contract or staggered contract was first formulated by John B. Taylor in his two articles, in 1979 "Staggered wage setting in a macro model". and in 1980 "Aggregate Dynamics and Staggered Contracts". In its simplest form, one can think of two equal sized unions who set wages in an industry. Each period, one of the unions sets the nominal wage for two periods (i.e. it is constant over the two periods). This means that in any one period, only one of the unions (representing half of the labor in the industry) can reset its wage and react to events that have just happened. When the union sets its wage, it sets it for a known and fixed period of time (two periods). Whilst it will know what is happening in the first period when it sets the new wage, it will have to form expectations about the factors in the second period that determine the optimal wage to set. Although the model was first used to model wage setting, in new Keynesian models that followed it was also used to ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Thomas J
Clarence Thomas (born June 23, 1948) is an American lawyer and jurist who has served since 1991 as an associate justice of the Supreme Court of the United States. President George H. W. Bush Clarence Thomas Supreme Court nomination, nominated him to succeed Thurgood Marshall. After Marshall, Thomas is the second African Americans, African American to serve on the U.S. Supreme Court and has been its List of United States Supreme Court justices by time in office, longest-serving member since Anthony Kennedy's retirement in 2018. He has also been the Court's oldest member since Stephen Breyer retired in 2022. Thomas was born in Pin Point, Georgia. After his father abandoned the family, he was raised by his grandfather in a poor Gullah community near Savannah, Georgia. Growing up as a devout Catholic, Thomas originally intended to be a priest in the Catholic Church but became dissatisfied with its efforts to combat racism and abandoned his aspiration to join the clergy. He gradua ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Michael Woodford (economist)
Michael Dean Woodford (born 1955) is an American macroeconomist and monetary theorist who currently teaches at Columbia University. Academic career Woodford holds B.A. from the University of Chicago (1977) and a J.D. from Yale Law School (1980). He completed his Ph.D. in economics at MIT in 1983. He began his teaching career at Columbia, and then taught at Chicago and Princeton before returning to Columbia to accept the John Bates Clark chair in 2004. He was awarded the John D. and Catherine T. MacArthur Foundation Prize Fellowship, which financed his research from 1981 to 1986. In 2007, he was awarded the Deutsche Bank Prize. and in 2024 he received the Erwin Plein Nemmers Prize in Economics. For 2024 he was awarded the BBVA Foundation Frontiers of Knowledge Award in the category of "Economics and Finance". Theoretical contributions Woodford's early research topics included sunspot equilibria, and imperfect competition. Thereafter he began to work on macroeconomic ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
David Romer
David Hibbard Romer (born March 13, 1958) is an American economist, the Herman Royer Professor of Political Economy at the University of California, Berkeley, and the author of a standard textbook in graduate macroeconomics as well as many influential economic papers, particularly in the area of New Keynesian economics. He is also the husband and close collaborator of Council of Economic Advisers former Chairwoman Christina Romer. Education and early career After graduating from Amherst Regional High School in Amherst, Massachusetts in 1976, he obtained his bachelor's degree in economics from Princeton University in 1980 and graduated as the valedictorian of his class. Romer completed a 138-page long senior thesis "A Study of the Effects of Population on Development, with Applications to Japan." Romer worked as a Junior Staff Economist at the Council of Economic Advisers from 1980 to 1981 before beginning his Ph.D. at the Massachusetts Institute of Technology, which he complet ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Calvo Contracts
A Calvo contract is the name given in macroeconomics to the pricing model that when a firm sets a nominal price there is a constant probability that a firm might be able to reset its price which is independent of the time since the price was last reset. The model was first put forward by Guillermo Calvo in his 1983 article "Staggered Prices in a Utility-Maximizing Framework". The original article was written in a continuous time mathematical framework, but nowadays is mostly used in its discrete time version. The Calvo model is the most common way to model nominal rigidity in new Keynesian DSGE macroeconomic models. The Calvo model of pricing We can define the probability that the firm can reset its price in any one period as h (the hazard rate), or equivalently the probability (1-h) that the price will remain unchanged in that period (the survival rate). The probability h is sometimes called the "Calvo probability" in this context. In the Calvo model the crucial feature is that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
New Keynesian Economics
New Keynesian economics is a school of macroeconomics that strives to provide microfoundations, microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics. Two main assumptions define the New Keynesian approach to macroeconomics. Like the New Classical approach, New Keynesian macroeconomic analysis usually assumes that households and firms have rational expectations. However, the two schools differ in that New Keynesian analysis usually assumes a variety of market failures. In particular, New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "Sticky (economics), sticky", which means they do not adjust instantaneously to changes in economic conditions. Wage and price stickiness, and the other present descriptions of market failures in New Keynesian Model (macroeconomics), models, imply that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Calvo (staggered) Contracts
A Calvo contract is the name given in macroeconomics to the pricing model that when a firm sets a nominal price there is a constant probability that a firm might be able to reset its price which is independent of the time since the price was last reset. The model was first put forward by Guillermo Calvo in his 1983 article "Staggered Prices in a Utility-Maximizing Framework". The original article was written in a continuous time mathematical framework, but nowadays is mostly used in its discrete time version. The Calvo model is the most common way to model nominal rigidity in new Keynesian DSGE macroeconomic models. The Calvo model of pricing We can define the probability that the firm can reset its price in any one period as h (the hazard rate), or equivalently the probability (1-h) that the price will remain unchanged in that period (the survival rate). The probability h is sometimes called the "Calvo probability" in this context. In the Calvo model the crucial feature is that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Dynamic Stochastic General Equilibrium
Dynamic stochastic general equilibrium modeling (abbreviated as DSGE, or DGE, or sometimes SDGE) is a macroeconomics, macroeconomic method which is often employed by monetary and fiscal authorities for policy analysis, explaining historical time-series data, as well as future forecasting purposes. DSGE econometric modelling applies general equilibrium theory and microfoundations, microeconomic principles in a tractable manner to postulate economic phenomena, such as economic growth and business cycles, as well as economic policy, policy effects and market shocks. Terminology As a practical matter, people often use the term "DSGE models" to refer to a particular class of classically quantitative econometrics, econometric models of business cycles or economic growth called real business cycle (RBC) models.Christiano (2018) DSGE models were initially proposed in the 1980s by Kydland & Prescott, and Long & Plosser;Long & Plosser (1983) Charles Plosser described RBC models as a precurso ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rational Expectations
Rational expectations is an economic theory that seeks to infer the macroeconomic consequences of individuals' decisions based on all available knowledge. It assumes that individuals' actions are based on the best available economic theory and information. History The concept of rational expectations was first introduced by John F. Muth in his paper "Rational Expectations and the Theory of Price Movements" published in 1961. Robert Lucas and Thomas Sargent further developed the theory in the 1970s and 1980s which became seminal works on the topic and were widely used in microeconomics. Significant Findings Muth’s work introduces the concept of rational expectations and discusses its implications for economic theory. He argues that individuals are rational and use all available information to make unbiased, informed predictions about the future. This means that individuals do not make systematic errors in their predictions and that their predictions are not biased by past er ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Journal Of Political Economy
The ''Journal of Political Economy'' is a monthly peer-reviewed academic journal published by the University of Chicago Press. Established by James Laurence Laughlin in 1892, it covers both theoretical and empirical economics. In the past, the journal published quarterly from its introduction through 1905, ten issues per volume from 1906 through 1921, and bimonthly from 1922 through 2019. The editor-in-chief is Esteban Rossi-Hansberg (University of Chicago). It is considered one of the top five journals in economics. JPE Micro and JPE Macro In 2023, University of Chicago Press announced the establishment of Journal of Political Economy Microeconomics (JPE Micro) and Journal of Political Economy Macroeconomics (JPE Macro), two new journals that are vertically integrated with the Journal of Political Economy. Abstracting and indexing The journal is abstracted and indexed in EBSCO, ProQuest, EconLit, Research Papers in Economics, Current Contents/Social & Behavioral Scien ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Neil Wallace
Neil Wallace (born 1939) is an American economist and professor of economics at Penn State University. He is considered one of the main proponents of new classical macroeconomics in the field of economics. Early life and education Wallace was born in 1939, in New York City. He attended Columbia University, where he earned a BA in economics in 1960 and his Ph.D in economics from the University of Chicago in 1964, where he studied under Nobel Prize-winning economist Milton Friedman. Career In 1969, Wallace was hired as a consultant to the Federal Reserve Bank of Minneapolis. He served as a professor at the University of Minnesota from 1974 until 1994 and as a professor at the University of Miami from 1994 until 1997. In 1997, he was hired as a professor at Penn State. In 1975, he and Thomas J. Sargent proposed the policy-ineffectiveness proposition, which refuted a basic assumption of Keynesian economics. In 2012, he was elected Distinguished Fellow of the American Economic ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Policy-ineffectiveness Proposition
The policy-ineffectiveness proposition (PIP) is a new classical theory proposed in 1975 by Thomas J. Sargent and Neil Wallace based upon the theory of rational expectations, which posits that monetary policy cannot systematically manage the levels of output and employment in the economy. Theory Prior to the work of Sargent and Wallace, macroeconomic models were largely based on the adaptive expectations assumption. Many economists found this unsatisfactory since it assumes that agents may repeatedly make systematic errors and can only revise their expectations in a backward-looking way. Under adaptive expectations, agents do not revise their expectations even if the government announces a policy that involves increasing money supply beyond its expected growth level. Revisions would only be made after the increase in the money supply has occurred, and even then agents would react only gradually. In each period that agents found their expectations of inflation to be wrong, a certain ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
