Lecture 9 Outline - B USINESS C YCLES A Monetary Policy as a Source of Recessions B Monetary Policy and Inflation III T HE “L UCAS C RITIQUE ”

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Economics 134 Professor Christina Romer Spring 2012 Professor David Romer LECTURE 9 EFFECTS OF POSTWAR MONETARY POLICY FEBRUARY 14, 2012 I. R OMER AND R OMER S E VIDENCE ON THE E FFECTS OF M ONETARY P OLICY A. Introduction B. The Approach 1. The Basic Idea 2. The specific type of episode Romer and Romer focus on 3. A Disinflation in the IS-MP-IA Model 4. Why focus only on this type of episode? C. Identifying the Episodes D. Evidence about the Effects of Monetary Policy 1. Basic patterns in the data 2. The reasoning behind the statistical tests 3. Regression results E. Discussion II. I MPLICATIONS FOR P OSTWAR
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Unformatted text preview: B USINESS C YCLES A. Monetary Policy as a Source of Recessions B. Monetary Policy and Inflation III. T HE “L UCAS C RITIQUE ” AND C REDIBILITY A. The Lucas Critique B. Example: The 1968 Temporary Tax Surcharge and the Consumption Function C. The Volcker Disinflation and the Behavior of Inflation 1. Overview 2. How central bank credibility might affect the output costs of disinflation 3. Blanchard’s evidence from the Volcker disinflation D. “Anchored” Expectations 1. Overview 2. A simple model of anchored expectations 3. Implications 4. A concern: how long can this last?...
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This note was uploaded on 02/28/2012 for the course ECON 134 taught by Professor Davidromer during the Spring '12 term at University of California, Berkeley.

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