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Role of Policymakers in Business Cycle Fluctuations

ISBN-10: 0521860164

ISBN-13: 9780521860161

Edition: 2006

Authors: Jim Granato, M. C. Sunny Wong

List price: $113.00
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Description:

The main theme is that a policymaker's role is to enhance the public's ability to co-ordinate their price information, price expectations, and economic activities. This role is fulfilled when policymakers maintain inflation stability. The authors use analyses of business-cycle performance in the US for the 1960-2000 period.
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Book details

List price: $113.00
Copyright year: 2006
Publisher: Cambridge University Press
Publication date: 3/13/2006
Binding: Hardcover
Pages: 318
Size: 5.75" wide x 8.50" long x 1.00" tall
Weight: 1.034
Language: English

List of Figures
List of Tables
Preface
The Interaction of Policy and Outcomes
Coordinating Price Information
Features of the Book
Related Work
The Plan of the Book
Outcomes and Policy: An Illustration
Inflation-Output Costabilization: The Data
Inflation Volatility
Output Volatility
Data on Inflation Uncertainty
Inflation-Stabilization Policy and IOCS
Policymakers and Information Coordination
Policy Indicators
The Federal Funds Rate Ratio
The Taylor Rule
Taylor Principle Deviations
The Interest Rate Volatility and IOCS Trade-Off
Summary
Policy Evolution: 1960 to 2000
The 1960s: Deemphasizing Inflation Stability
The 1970s: Inflation Instability and Stagflation
The 1980s: Inflation Stability Reemphasized
The 1990s: Continuity and Preemption
Summary
The Role of Policymakers
The Theoretical Model
Price Level Adjustment
Aggregate Demand
The Policy Rule
Implementation
The Taylor Rule: Structure and Development
Summary
Policy and Aggregate Variability
Feasibility
Equilibrium Inflation and Alternative Target Mixes
Equilibrium Output and Alternative Target Mixes
Aggregate Variability
The Policy Rule and Inflation Variability
The Crossover Effect of Output Targeting (CEOT)
The Policy Rule and Output Variability
The Crossover Effect of Inflation Targeting (CEIT)
Summary
Appendix to Chapter 5
Solving the System
The Optimal Policymaker Role
Optimal Policy Target Emphasis
Regime and Preference Shifts and IOCS
Feasible Policy Weight Ranges
IOCS in the Presence of Exogenous Shocks
Summary
Appendix to Chapter 6
The Interest Rate Volatility and IOCS Trade-Off: A Test
Coordination Dynamics
Coordinating Inflation Forecasts
Empirical Implications of the Theoretical Model
The Relative-Real-Wage Contract Specification
The IS Specification
The Taylor Rule
Stability Analysis
The Equilibrium Inflation Rate
Expectational Stability
Policy and Inflation Dynamics
Inflation Persistence
Inflation Volatility
Tests
Estimates of Inflation Persistence
The Appropriate Structural Break and Policy Effectiveness
Estimates of Inflation Persistence and Volatility
Summary
Appendix to Chapter 7
A Brief Summary of the Adaptive Learning Approach
Inflation-Stabilizing Policy: Robustness
The Model
Determinacy
Adaptive Learning by Agents
Model Illustrations
Learning Dynamics
Inflation Persistence
Summary
Conclusion and Implications
Implications for Policymakers
Institutional Reform and Information Coordination
Implications for Future Research
The Need for Comparative Analysis
The Effect of Political and Social Forces on Policy
Long-Term Consequences
Final Thoughts
References
Index