Knowledge, Information, and Expectations in Modern Macroeconomics

by Aghion, Philippe; Frydman, Roman; Stiglitz, Joseph E.; Woodford, Michael; Phelps, Edmund S.

• ISBN13: 9780691094854
• ISBN10: 0691094853
• Format: Paperback
• Copyright: 2003-01-06
• Publisher: Princeton Univ Pr

Summary

Macroeconomics would not be what it is today without Edmund Phelps. This book assembles the field's leading figures to highlight the continuing influence of his ideas from the past four decades. Addressing the most important current debates in macroeconomic theory, it focuses on the rates at which new technologies arise and information about markets is dispersed, information imperfections, and the heterogeneity of beliefs as determinants of an economy's performance. The contributions, which represent a breadth of contemporary theoretical approaches, cover topics including the real effects of monetary disturbances, difficulties in expectations formation, structural factors in unemployment, and sources of technical progress. Based on an October 2001 conference honoring Phelps, this incomparable volume provides the most comprehensive and authoritative account in years of the present state of macroeconomics while also pointing to its future. The fifteen chapters are by the editors and by Daron Acemoglu, Jess Benhabib, Guillermo A. Calvo, Oya Celasun, Michael D. Goldberg, Bruce Greenwald, James J. Heckman, Bart Hobijn, Peter Howitt, Hehui Jin, Charles I. Jones, Michael Kumhof, Mordecai Kurz, David Laibson, Lars Ljungqvist, N. Gregory Mankiw, Dale T. Mortensen, Maurizio Motolese, Stephen Nickell, Luca Nunziata, Wolfgang Ochel, Christopher A. Pissarides, Glenda Quintini, Ricardo Reis, Andrea Repetto, Thomas J. Sargent, Jeremy Tobacman, and Gianluca Violante. Commenting are Olivier J. Blanchard, Jean-Paul Fitoussi, Mark Gertler, Robert E. Hall, Robert E. Lucas, Jr., David H. Papell, Robert A. Pollak, Robert M. Solow, Nancy L. Stokey, and Lars E. O. Svensson. Also included are reflections by Phelps, a preface by Paul A. Samuelson, and the editors' introduction.

Table of Contents

Contributors	ix
Edmund Phelps, Insider-Economists' Insider	1	(2)
Paul A. Samuelson
Edmund S. Phelps and Modern Macroeconomics	3	(22)
Philippe Aghion
Roman Frydman
Joseph Stiglitz
Michael Woodford
PART I Information, Wage-Price Dynamics, and Business Fluctuations
Imperfect Common Knowledge and the Effects of Monetary Policy	25	(34)
Michael Woodford
Comments on Woodford	59	(5)
Lars E. O. Svensson
Sticky Information: A Model of Monetary Nonneutrality and Structural Slumps	64	(23)
N. Gregory Mankiw
Ricardo Reis
A Theory of Rational Inflationary Inertia	87	(31)
Guillermo A. Calvo
Oya Celasun
Michael Kumhof
Comments on Calvo, Celasun, and Kumhof	118	(5)
Mark Gertler
Macroeconomic Fluctuations in an Economy of Phelps-Winter Markets	123	(14)
Bruce Greenwald
Joseph Stiglitz
General Comments on Part I	137	(8)
Robert E. Lucas, Jr.
PART II Imperfect Knowledge, Expectations, and Rationality
Imperfect Knowledge Expectations, Uncertainty-Adjusted Uncovered Interest Rate Parity, and Exchange Rate Dynamics	145	(38)
Roman Frydman
Michael D. Goldberg
Comments on Frydman and Goldberg	183	(5)
David H. Papell
Endogenous Fluctuations and the Role of Monetary Policy	188	(40)
Mordecai Kurz
Hehui Jin
Maurizio Motolese
A Debt Puzzle	228	(39)
David Laibson
Andrea Repetto
Jeremy Tobacman
Comments on Laibson, Repetto, and Tobacman	267	(4)
Robert A. Pollak
Reflections on Parts I and II	271	(14)
Edmund S. Phelps
PART III Determinants of Equilibrium Unemployment
How Monopsonistic Is the (Danish) Labor Market?	285	(24)
Dale T. Mortensen
Company Start-Up Costs and Employment	309	(17)
Christopher A. Pissarides
European Unemployment: From a Worker's Perspective	326	(25)
Lars Ljungqvist
Thomas J. Sargent
Comments on Ljungqvist and Sargent	351	(6)
Olivier J. Blanchard
Flexibility and Job Creation: Lessons for Germany	357	(37)
James J. Heckman
The Beveridge Curve, Unemployment, and Wages in the OECD from the 1960s to the 1990s	394	(38)
Stephen Nickell
Luca Nunziata
Wolfgang Ochel
Glenda Quintini
Comments on Nickell, Nunziata, Ochel, and Quintini	432	(11)
Jean-Paul Fitoussi
PART IV Education, Technical Change, and Growth
Wage Inequality and Technological Change: A Nelson-Phelps Approach	443	(19)
Philippe Aghion
Peter Howitt
Gianluca Violante
Comments on Aghion, Howitt, and Violante	462	(2)
Robert E. Hall
Factor Prices and Technical Change: From Induced Innovations to Recent Debates	464	(28)
Daron Acemoglu
Comments on Acemoglu	492	(6)
Nancy L. Stokey
Population and Ideas: A Theory of Endogenous Growth	498	(24)
Charles I. Jones
Another View of Investment: 40 Years Later	522	(24)
Jess Benhabib
Bart Hobijn
General Comments on Part IV	546	(4)
Robert M. Solow
Reflections on Parts III and IV	550	(15)
Edmund S. Phelps
Index	565