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on Dynamic General Equilibrium |
| By: | Renuka Metcalfe (University of Swansea) |
| Abstract: | This paper considers dynamic equilibria in wage bargaining unifying for the first time the models of Coles and Wright (1998) and Pissarides and producing in contrast to the Coles and Wright model, a non-deficient equilibrium. In sharp contrast to the Pissarides model we analyse a fully dynamic model with non-linear cost functions and risk-averse agents, to provide overall, saddle-path stability and unique wage and employment outcome which is devoid of limit cycles. |
| Keywords: | Wage determination, job matching, unemployment, labour markets, bargaining. |
| JEL: | J23 J31 J40 J64 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:1106&r=dge |
| By: | Peter N. Ireland (Boston College); Scott Schuh (Federal Reserve Bank of Boston) |
| Abstract: | A two-sector real business cycle model, estimated with postwar U.S. data, identifies shocks to the levels and growth rates of total factor productivity in distinct consumption- and investment-goods-producing technologies. This model attributes most of the productivity slowdown of the 1970s to the consumption-goods sector; it suggests that a slowdown in the investment-goods sector occurred later and was much less persistent. Against this broader backdrop, the model interprets the more recent episode of robust investment and investment-specific technological change during the 1990s largely as a catch-up in levels that is unlikely to persist or be repeated anytime soon. |
| Keywords: | productivity, real business cycle |
| JEL: | E32 O41 O47 |
| Date: | 2006–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:642&r=dge |
| By: | Thorsten Koeppl (Department of Economics, Queen‘s University, Kingston, Ontario K7L 3N6, Canada.); Cyril Monnet (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Ted Temzelides (Department of Economics, University of Pittsburgh, 4715 WWPH, 230 S Bouquet Street, Pittsburgh, PA 15260, USA.) |
| Abstract: | We investigate the role of settlement in a dynamic model of a payment system where the ability of participants to perform certain welfare-improving transactions is subject to random and unobservable shocks. In the absence of settlement, the full information first-best allocation cannot be supported due to incentive constraints. In contrast, this allocation is supportable if settlement is introduced. This, however, requires that settlement takes place with a sufficiently high frequency. |
| Keywords: | Payments, Settlement, Intertemporal Incentives. |
| JEL: | E4 E5 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060604&r=dge |
| By: | Siu, Henry |
| Abstract: | I consider the role of conscription as a fiscal shock absorber in times of war. Conscription of military personnel allows the fiscal authority to minimize wartime government expenditure, and hence, minimize tax distortions associated with war finance. I develop a simple dynamic general equilibrium model to articulate this view, and calibrate the model to mimic the U.S. World War II experience. Analysis of the calibrated model indicates that the value of conscription as a fiscal policy tool is quantitatively large. |
| Date: | 2006–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:bricol:siu-06-04-26-12-42-20&r=dge |
| By: | Stephanie Schmitt-Grohé (Duke University, Durham, NC 27708, United States.); Martín Uribe (Duke University, Durham, NC 27708, United States.) |
| Abstract: | In this paper, we study Ramsey-optimal fiscal and monetary policy in a mediumscale model of the U.S. business cycle. The model features a rich array of real and nominal rigidities that have been identified in the recent empirical literature as salient in explaining observed aggregate fluctuations. The main result of the paper is that price stability appears to be a central goal of optimal monetary policy. The optimal rate of inflation under an income tax regime is half a percent per year with a volatility of 1.1 percent. This result is surprising given that the model features a number of frictions that in isolation would call for a volatile rate of inflation—particularly nonstate-contingent nominal public debt, no lump-sum taxes, and sticky wages. Under an income-tax regime, the optimal income tax rate is quite stable, with a mean of 30 percent and a standard deviation of 1.1 percent. |
| Keywords: | Ramsey Policy, Inflation Stabilization, Tax Smoothing, Time to Tax, Nominal and Real Rigidities. |
| JEL: | E52 E61 E63 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060612&r=dge |
| By: | Jianjun Miao (Institute for Economic Development, Boston University); |
| Keywords: | searching, matching and bargaining, bid-ask spread, liquidity, welfare, Walrasian equilibrium |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-144&r=dge |