Lecture 14 Slides - Economics 210c/236a Fall 2011 Christina...

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L ECTURE 14 The Determinants of Macroeconomic Policy: The Postwar Era December 7, 2011 Economics 210c/236a Christina Romer Fall 2011 David Romer
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I. I NTRODUCTION
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-2 0 2 4 6 8 10 12 1952-I 1954-I 1956-I 1958-I 1960-I 1962-I 1964-I 1966-I 1968-I 1970-I 1972-I 1974-I 1976-I 1978-I 1980-I 1982-I 1984-I 1986-I 1988-I 1990-I 1992-I 1994-I 1996-I 1998-I 2000-I 2002-I 2004-I 2006-I 2008-I 2010-I Percent Inflation and Unemployment over the Postwar Era Inflation (PCE deflator) Unemployment
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II. R ICHARD C LARIDA , J ORDI G ALÍ , AND M ARK G ERTLER , “M ONETARY P OLICY R ULES AND M ACROECONOMIC S TABILITY : E VIDENCE AND S OME T HEORY
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Taylor’s Interest Rate Rule
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Estimating a Conventional (Backward-Looking) Interest Rate Rule i t = α + βπ t + γ ( y t – y t ) + w t , or i t = r EQ + π * + β ( π t π *)+ γ ( y t – y t ) + w t . One could consider estimating this by OLS. _ _
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Derivation of the Equation that CGG Estimate (I)
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Derivation of the Equation that CGG Estimate (II)
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Source: Clarida, G alí, a nd Gertler.
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Source: Taylor (1999).
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Source: Clarida, G alí, a nd Gertler.
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Source: Taylor (1999).
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III. A THANASIOS O RPHANIDES . 2003. “T HE Q UEST FOR P ROSPERITY WITHOUT I NFLATION
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Orphanides’s Framework
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Source: Orphanides.
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Source: Orphanides.
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Source: Orphanides.
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“A 4% unemployment rate is used in calculating full- employment receipts and outlays as a conventional standard …. To serve this purpose the unemployment rate used … must be reasonably stable from year to year. However, this does not mean that the feasible and
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This note was uploaded on 02/28/2012 for the course ECON 210c taught by Professor Romer,c during the Fall '08 term at University of California, Berkeley.

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Lecture 14 Slides - Economics 210c/236a Fall 2011 Christina...

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