Is the observed correlation between current and lagged inflation a function of backward-looking expectations, or do lags in regressions merely proxy for rational forward-looking as new-Keynesian Phillips curve? Recent research has attempted to answer this question by using instrumental variables techniques estimate "hybrid" specifications that allow effects future inflation. We show these tests behavior have very low power against alternative, but non-nested,...

This paper develops a new technique for measuring the effect of computer usage on U.S. productivity growth. Standard National Income and Product Accounts (NIPA) measures capital stock, which are constructed by weighting past investments according to schedule economic depreciation (the rate at loses value as it ages), shown be inappropriate growth accounting because they do not capture unit productivity. is due technological obsolescence: machines that still productive retired no longer near...

The canonical inflation specification in sticky-price rational expectations models (the new-Keynesian Phillips curve) is often criticized for failing to account the dependence of on its own lags. In response, many studies employ a “hybrid” which depends lagged and expected future values, together with driving variable such as output gap. We consider some simple tests hybrid model that are derived from closed form. find describes dynamics poorly, little empirical evidence type rational,...

This paper analyzes the stability over time of econometric process for euro-area inflation since 1970, focusing in particular on behavior so-called persistence parameter (the sum coefficients lagged dependent variables). Perhaps surprisingly, light Lucas critique, our principal finding is that there appears to be relatively little instability parameters process. Full-sample estimates are generally close 1, and we fail reject hypothesis this has been stable time. We discuss how these results...

The eurozone's TARGET2 payments system has featured heavily in academic and popular discussions of the euro crisis. Some this commentary described as being responsible for a ‘secret bailout’ Europe's periphery. Another common theme been that built up large credit risks Germany should break up. This paper discusses system, focusing particular on how it impacts balance sheets central banks participate system. It factors driving balances, considers some counterfactual cases which eurozone...

In 1996, the U.S. Department of Commerce began using a new method to construct all aggregate “real” series in National Income and Product Accounts (NIPA). This is based on so‐called “ideal chain index” pioneered by Irving Fisher. The methodology has some extremely important implications that are unfamiliar many practicing empirical economists; as result, mistaken calculations with NIPA data have become very common. paper explains motivation for switch aggregation, then illustrates usage...

In 1996, the U.S. Department of Commerce began using a new method to construct all aggregate "real" series in National Income and Product Accounts (NIPA). This employs so-called "ideal chain index" pioneered by Irving Fisher. The methodology has some extremely important implications that are unfamiliar many practicing empirical economists; as result, mistaken calculations with NIPA data have become very common. paper explains motivation for switch aggregation then illustrates usage...

The one-sector Solow–Ramsey model is the most popular of longrun economic growth. This paper argues that a two-sector approach, in which technological progress production durable goods exceeds rest economy, provides far better picture behavior U.S. economy. shows how to use twosector approach real chain-aggregated variables currently featured National Income and Product Accounts. It shown each major chain-aggregates—output, consumption, investment, capital stock—will tend long run grow at...

Real equipment investment in the United States has boomed recent years, led by soaring computers. We find that traditional aggregate econometric models completely fail to capture magnitude of this growth - mainly because these neglect address two features are crucial (and unique) current boom. First, pace at which firms replace depreciated capital increased. Second, been more sensitive cost capital. document stem from special behavior computers and therefore propose a disaggregated approach....

A number of researchers have recently argued that the new-Keynesian Phillips curve matches empirical behavior inflation well when labor income share is used as a driving variable, but fits poorly deterministically detrended output used. The theoretical motivation for these results rests on idea gap—the deviation between actual and potential output—is better captured by share, in turn implying central banks should raise interest rates response to increases this variable. We show evidence...

The one-sector Solow-Ramsey model is the most popular of long-run economic growth. This paper argues that a two-sector approach, which distinguishes durable goods sector from rest economy, provides far better picture behavior U.S. economy. Real output has consistently grown faster than Because investment spending on goods, model's hypothesis balanced growth, so real aggregates for consumption, investment, output, and capital stock all grow at same rate in long run, rejected by data. In...

In any data set with individual forecasts of economic variables, some forecasters will perform better than others. However, it is possible that these ex post differences reflect sampling variation and thus overstate the ante between forecasters. this paper, we present a simple test null hypothesis all in U.S. Survey Professional Forecasters have equal ability. We construct statistic reflects both relative absolute performance forecaster use bootstrap techniques to compare empirical results...

Summary Recent years have seen a significant focus in the literature on growth and development idea that legal political institutions are key determinant of economic development. The main finding this paper is primacy may be misplaced business‐friendly policies (proxied for here by World Bank's Doing Business indicator) level income per capita. We find country's rank dominates range measures institutional quality as an explanatory variable also to previous findings assigning role educational...

This paper examines the role that computers have played in boosting U.S. economic growth recent years. The focuses on two effects--the effect of increased productivity computer-producing sector and investments computing equipment those who use them--and concludes together they account for almost all acceleration labor productivity. In calculating computer-usage effect, standard NIPA measures capital stock are inappropriate accounting because do not technological obsolescence; this occurs...

Explaining the Investment Boom of 1990s Stacey Tevlin (bio) and Karl Whelan Abstract Real equipment investment in United States boomed 1990s, led by soaring computers. We find that traditional aggregate econometric models completely fail to capture magnitude this growth—mainly because these neglect address two features were crucial (and unique) 1990s' boom. First, pace at which firms replace depreciated capital increased. Second, was more sensitive cost capital. document stem from special...

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Journal Article Federal Reserve Information during the Great Moderation Get access Antonello D'Agostino, D'Agostino 1Central Bank and Financial Services Authority of Ireland Search for other works by this author on: Oxford Academic Google Scholar Karl Whelan 2University College Dublin European Economic Association, Volume 6, Issue 2-3, 1 May 2008, Pages 609–620, https://doi.org/10.1162/JEEA.2008.6.2-3.609 Published: 01 2008