We study the effects of government spending by using a structural, large dimensional, dynamic factor model. We find that the government spending shock is non-fundamental for the variables commonly used in the structural VAR literature, so that its impulse response functions cannot be consistently estimated by means of a VAR. Government spending raises both consumption and investment, with no ev...

We study forward-looking economic models assuming that agents take one step ahead expectations looking back k time periods. We show that the dynamics of the economy with such an expectation function are characterized by the coexistence of perfect foresight and nonperfect foresight cycles. The stability of all these periodic solutions under bounded rationality is related to the stability of the ...

We examine robustness of stability under learning to observability of exogenous shocks. Regardless of observability assumptions, the minimal state variable solution is robustly stable under learning provided the expectational feedback is not both positive and large, while the nonfundamental solution is never robustly stable. Overlapping generations and New Keynesian models are considered and co...

A comparison of the point forecasts and the central tendencies of probability distributions of in‡ation and output growth of the SPF indicates that the point forecasts are sometimes optimistic relative to the probability distributions. We consider and evaluate a number of possible explanations for this …nding, including the degree of uncertainty concerning the future, computational costs, delay...

In this paper, we re-examine the empirical relevance of the cost channel of monetary policy. We employ recently developed moment-conditions inference procedures, which provide a more e¢ cient and reliable econometric framework than in previous literature. Using US data, our results suggest that there is no substantial evidence for the existence of a cost channel. Keywords: Cost channel; Phillip...

The speci…cation of the accumulation function is critical for the properties and implications of structuralist and post-Keynesian models. A large Kaleckian literature assumes that investment is relatively insensitive to variations in the utilization rate of capital, and this extension of a standard short-run "Keynesian stability condition" to the long run has been defended by Lavoie and Dutt, a...

The purpose of this note is to demonstrate a sufficient condition for discrete tâtonnement process to lead to chaos in a general equilibrium model with multiple commodities. The result indicates that as the speed of price adjustment increases the discrete tâtonnement process is complex in a general equilibrium economy in which there are multiple equilibria. JEL classification: E32; C62 Keywards...

Economists model time as continuous or discrete. The recent literature on continuous time models with delays should help to bridge the gap between these two families of models. In this note, we propose a simple time–to–build model in continuous time, and show that a discrete time version is a true representation of the continuous time problem under some sufficient conditions. JEL codes: O40, E3...

This paper presents a procedure for studying industrial performance and related issues such as changes in the wage structure. This procedure combines cluster analysis and discriminant analysis as a package, and applies this package to time series data. This enables us to organize industrial data into groups with similar wage or performance histories and then to extract summary time-series showi...

What are the prospects for long-run economic growth? One prominent line of thinking is trend toward stagnation. Stagnationism has a long history in economics, beginning prominently with Malthus and occasionally surfacing different guises. Prominent themes here following: Will growth slow perhaps even reverse under weight resource depletion? overpopulation diminishing returns lower living standa...