Real Business Cycle Theory notes
Friedman's Descendants, I: Real Business Cycle theory (Long and Plosser
1983; Mankiw 1989)
A.
Lucas famously formalized Friedman's arguments with his
"island" model. E
Monetary Base notes
The Monetary Base
A.
There are numerous measures of "the" money supply; the least
controversial and the most fundamental is known as the monetary
base.
1.
In a fiat regime, the mon
New Keynesianism notes
Friedman's Descendants, II: New Keynesianism (Romer 1993)
A.
To rebut RE "policy irrelevance" arguments, NKs develop a
large number of nominal andreal rigidity models.
B.
Moneta
Efficient Policy notes
Policy Questions
A.
What does monetary policy do?
1.
Real view: Affects the price level, inflation, and the
nominal interest rate.
2.
Nominal view: In addition, has short-run im
Rational Expectations notes
Rational Expectations: What It Is, What It Isn't
A.
The RE assumption is a critical addition to basic micro. It is
probably the first formalization of the link between econ
Rational Ignorance vs Rational Irrationality notes
Alternatives to Rational Expectations, II: "Rational Ignorance vs. Rational
Irrationality"
A.
The puzzle: Low-information, high certainty, systematic
Underlying Questions notes
Underlying Questions
A.
Why does output fluctuate around its trend?
1.
Real view: Multi-factor productivity ("technology")
shocks, other supply shocks (oil crisis), plus fis
Solving for RE Models notes
Solving a RE Model: A Simple Macroeconomy
A.
Adding uncertainty complicates matters, but the extra insight is worth the
effort.
B.
People can have both nominal and real unc
The Equation of Exchange notes
The Equation of Exchange
A.
M is money -measured however you like it.
B.
M is money
Measured however
C.
V, velocity, is the number that makes the equation true; its
valu
Bias Toward Zero in Aggregate Perceptions notes
Alternatives to Rational Expectations, I: Fremling and Lott's "Bias Toward
Zero in Aggregate Perceptions"
A.
Look at agents as implicit econometricians.