For several years now I have been involved in a project investigating the theoretical and practical possibilities of promoting full employment and price stability in an economy using state money through a government-sponsored job guarantee and management of the national budget based on the principles of functional finance. Discussion and debate on any or all aspects of this work is therefore ve...

While I view myself as an applied macroeconomist, I have worked on a broad array of topics which overlap with public finance, development, international economics, and econometrics. I believe this multidisciplinary approach has been fruitful in providing integrated treatments of different and yet related questions. In most of my work, I combine both macroeconomic and microeconomic data with rig...

Central bankers’ conventional wisdom suggests that nominal interest rates should be raised to implement a lower inflation target. In contrast, I show that the standard New Keynesian monetary model predicts that nominal interest rates should be decreased to attain this goal. Real interest rates, however, are virtually unchanged. These results also hold in recent vintages of New Keynesian models ...

Walsh (2004) demonstrated that the robustly optimal targeting rule of Giannoni and Woodford (2003a, 2003b) and the targeting rule of a policy maker concerned with robustness in the sense of Hansen and Sargent (2004) were identical in a purely forward-looking new Keynesian model. In this note, I first show that the equivalence result extends to a new Keynesian model with inflation inertia (Woodf...

A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. A Taylor rule does not imply determinacy, nor does it support an efficient outcome. Optimal policies yield a...

Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modelling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust. Government spending multipliers in an alternative empirically estimated ...

E agree about the goals of price stability, low unemployment and stable economic growth, but they disagree about the policies to achieve these goals. The disagreement is particularly heated over discretionary countercyclical Keynesian fiscal policy. After the poor macroeconomic performance of the 1970s and critical policy evaluations of the Keynesian approach— ranging from Robert E. Lucas and T...

The theory of capital investment is the cornerstone of the theory of macroeconomic dynamics, and the question of whether or not the agents involved in the investment decision have the information needed to make individually and collectively optimal choices is central to capital accumulation theory. New Classical and neoclassical theory assume that they do. Keynesian and Post Keynesian theory as...

2 Introduction 3 NAIRU vs. Keynes: conflicting theories of unemployment 4 Empirical work (review) 6 Econometric method 7 Testing the NAIRU story 8 Testing the Keynesian story 11 Combining NAIRU and Keynesian factors 12 Conclusion 14 Bibliography 15 Tables 17 Table 1. A NAIRU model 17 Table 2. A Keynesian model 18 Table 3. Unmployment regression: u = c + ∆ infl + rr + ud + tw + tot 19 Table 4. U...