Handbook of Fiscal Policy_1 docx

[...]... imposition of several types of a priori restrictions on the A,’s, B,,’s,and R,’s These restrictions usually fall into one of the following three categories:’ (a) A priori setting of many of the elements of the A,’s and B,’s to zero (b) Restrictions on the orders of serial correlation and the extent of cross-serial correlation of the disturbance vector &[, restrictions which amount to a priori setting of many... observation of ys and x,, S 5 t, the estimated reduced form (3), together with (4), is sufficient This is simply an exercise in a sophisticated kind of extrapolation, requiring no understanding of the structural parameters,that is, theeconomicx of the model For purposes of conditional forecasting, or the prediction of the future behavior of some components of yl and xl cor~difior~trl particular values of other... revolution in this way, it is impossible to account for some of its most important features: the evolution of macroeconolnics into a quantitative, scientijir’ discipline, the development of explicit statistical descriptions of economic behavior, the increasing reliance of government officials on technical economic expertise, and the introduction of the use of mathematical control theory to manage an economy... successful hypotheses about the behavior of these series Alternative principles, such as the postulate of the existence of a third-party auctioneer inducing wage rigidity and uncleared markets, are similarly “unrealistic,” in the not especially important sense of not offering a good description of observed labormarket institutions A refinement of the unexplained postulateof an uncleared labor market has been... Economic Development: The Stateof the Economic Literature 1631 1653 1671 Michael Wcrsylerlko 115 Fiscal Pressures and the Privatization of Local Services Yolrrrlda K K o d r z y k i 1693 116 Theories of Interjurisdictional Competition 1713 Dqd~ne A Kellyon Part C: Implementation of Fiscal Policy 1 17 Wealth, Economic Infrastructure, and Monetary Policy Jerry L J o r d m 1743 118 Fiscal Policy and Fickle...This Page Intentionally Left Blank Contents Preface Contents of Cornptrnion Volunle (Handbook of Monetary Policy) 111 ix UNIT 111 FISCAL POLICY Part A: Keynesian 80 HistoricalPerspectives After 98 Macroeconomics Robert E Lucas, Jr and Tllornas J Sargent 81 Formation of Fiscal Policy: The Experience of the Past Twenty-Five Years AItw J Auerback 1 1003 Evidence on Government Competition... receive information about some prices more often than other prices On the basis of 990 Lucas and Sargent their limited information-the lists that they have of current and past absolute prices of various goods-agents are assumed to make the best possible estimate of all of the relative prices that influence their supply and demanddecisions Because they do not have all of the information necessary to compute... systematically related to the state of the economy Effectiveness, then,rests on the inability of private agents torecognize systematic patterns in monetary and fiscal policy To a large extent, criticism of equilibrium models is simply a reaction to these imSo that plications for policy wide is (or was) the consensus the task of macroeconomics is the discovery of the particular monetary and fiscal policies which... obtained by the method of least squares All that examination of the data by themselves can deliver is reliable estimates of those parameters It is not generally possible to work backward from estimatesof the P’s and Q’s alone to derive unique estimates of the structural parameters, the AI’s, B.i’s,and R,’s In general, infinite numbers of A’s, B’s, and R’s are compatible with a single set of P’s and Q’s This... theoretical, one If the macroeconometric models had compiled record of parameter stability, particularly in the face of breaks in the stochastic behavior of the exogenous variof ables and disturbances, onewould be skeptical as to the importance prior theoretical objections of the sort we have raised In fact, however, the track record of the major econometric models is, on any dimension other than very . l44 l 14 93 15 21 15 39 16 07 16 21 16 31 16 53 16 71 16 93 17 13 17 43 17 49 viii 11 9. Money, Fiscal Discipline, and Growth Jerry L. Jordan 12 0 Debt Policy and Management Jcrmes R. Rnnlsey arlcl Mer1 Htrckberrt Contents 11 25 I167 I193 11 99 12 21 I243 l25 1 12 57 I277 12 87 I295 13 09