introduccincore

Un Consenso Mínimo entre los E i t ?Economistas?Juan José Echavarría

14 de agosto de 2007

1

LecturasLecturasBlanchard,O. (2000)Mankiw, G.N. (1990)Mankiw, G.N. (1990)Mankiw, G., (2006) Krugman, P. (1994)Chari V V & P J Kehoe (2006)Chari, V. V. & P. J. Kehoe, (2006)El debate en AER (1997)

Blanchard, O., (1997)Blinder, Alan S. (1997)Taylor, J., (1997) Solow,R (1997)Solow,R (1997) Eichenbaum, M., (1997)

Keynes, Teoría GeneralRomer D & C Romer (2002)Romer, D. & C. Romer, (2002)Conclusiones para nuestra Macro 2 2

Blanchard (2000) “What do we know…”

• Pre-1940 Explorationp• 1940-1980 Consolidation

– Establishing a basic framework– Back to Dynamics– From Models to data– The Casual Treatment of ImperfectionsThe Casual Treatment of Imperfections

• Post 1980 I. Working out the quantity theory– Staggering and the adjustment of the price level– Real and Nominal Rigidities– Demand vs output

Money as numeraire and medium of exchange– Money as numeraire and medium of exchange4

• Post 1980 II. The Role of other imperfectionsp– Unemployment in the labor market– Saving, investment and credit

I i t– Increasing returns– Expectations as drifting forces

• Macro in the (near) futureMacro in the (near) future– Which imperfections– Policy and Welfare– The medium run– Macroeconomic and Institutions

Current debates– Current debates5

Pre-1940 ExplorationPre 1940 Exploration

• macroeconomics was notmacroeconomics was not macroeconomics yet, but monetary theory on one side business cycletheory on one side, business cycle theory on the other.

lack of an integrated framework– lack of an integrated framework• The word "macroeconomics" does not

appear until the 1940sappear until the 1940s– the first use of "macroeconomics" in a title

of an article is by Klein in 1946 in anof an article is by Klein in 1946, in an article called, fittingly, "Macroeconomics and the theory of rational behavior.“

7

1940-1980 Consolidation1940 1980 Consolidation• A period of consolidation. A period duringA period of consolidation. A period during

which an integrated framework was developed-starting with the IS-LM, – all the way to dynamic general equilibrium

models-d d t l if th l f h k d– and used to clarify the role of shocks and

propagation mechanisms in fluctuations. • But a construction with an Achille's heelBut a construction with an Achille s heel

– namely too casual a treatment of imperfections• leading to a crisis in the late 1970sg

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1940-1980 Consolidation1940 1980 Consolidation

• Establishing a basic frameworkEstablishing a basic framework– Say's law": False

"Walras law" : True– Walras law : True– The "Classical Dichotomy"

• between the determination of the price level on• between the determination of the price level on the one hand, and the determination of relative prices on the other: False.

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1940-1980 Consolidation1940 1980 Consolidation– "Value theory versus Monetary Theory“Value theory versus Monetary Theory

• the issue of whether standard methods used in value theorymethods used in value theory could be used to think about the role and the effects of money in arole and the effects of money in a monetary economy.

– The answer was: Yes– The answer was: Yes.

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– "Loanable Funds or Liquidity Preference“Loanable Funds or Liquidity Preference • the issue of whether the interest

rate was determinedrate was determined – in the goods markets (through the equal-ity of

saving and investment), g ),– or in the financial markets (through the equality

of the demand and the supply of money).

12

1940-1980 Consolidation1940 1980 Consolidation• A period of consolidation.A period of consolidation. • A period during which an integrated

framework was developed-starting withframework was developed starting with the IS-LM, – all the way to dynamic general equilibrium y y g q

models-and used to clarify the role of shocks and propagation mechanisms in fluctuationsfluctuations.

• But a construction with an Achille's heelheel– namely too casual a treatment of

imperfections, leading to a crisis in the late13

1940-1980 Consolidation1940 1980 Consolidation• Back to dynamicsBack to dynamics

– the notion of "temporary equilibrium," developed by Hicks in "Value and Capital“

– The natural next step was to introduce rational expectations.

Th l i f t ki th t t l If• The logic for taking that step was clear: If one was to explore the implications of rational behavior,

– it seemed reasonable to assume that this extended to the formation of expectations

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Rational ExpectationsRational Expectations• That step however took much longer.That step however took much longer.

– It is hard to tell how much of the delay was due to technical problems

• which indeed were substantial – and how much to objections to the assumption

itselfitself. • But this was eventually done

– and by the late 1970s, most of the models hadand by the late 1970s, most of the models had been reworked under the assumption of rational expectations.

15

1940-1980 Consolidation1940 1980 Consolidation

• From models to dataFrom models to data– In the late 1970s, the focus shifted, at least

on the academic side to smaller modelson the academic side, to smaller models. – return to smaller, more transparent,

structural models, whose limited size hadstructural models, whose limited size had the additional advantage of making them solvable under rational expectations

– VAR (vector autoregressions)

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From 1940 to 1980From 1940 to 1980

• The casual treatment of imperfectionsThe casual treatment of imperfections– Most macro models developed in the

1960s and 1970s had a schizophrenic1960s and 1970s had a schizophrenic feeling:

• A careful modeling of consumption, g p ,investment, and asset demand decisions on the one hand,

an a theoretical specification of price and wage– an a-theoretical specification of price and wage setting on the other

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From 1940 to 1980From 1940 to 1980• Nominal rigidities, when combined with later g ,

developments such as rational expectations, proved to have rich and relevant implications.

D b h (1976) li l f t– Dornbusch (1976) explica las fuertesfluctuaciones en la tasa de cambio nominal (overshooting)

• The lesson was more general: nominal rigidities in some markets led to more volatility in others, here in the foreign exchange market

– Salarios rígidos y expectativas racionales• Fisher () & Taylor ()

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From 1940 to 1980From 1940 to 1980• fixed price equilibrium" approach developedfixed price equilibrium approach developed

in the 1970s (Barro & Grossman (1976)– if the price vector was such as to yield a state of

generalized excess supply (in both goods and labor markets),

• the economy behaved very much as in the Keynesian• the economy behaved very much as in the Keynesian model.

– If excess demand the economy behaved like the i t i ( l i d ll ?)soviet union (o los paises en desarrollo?)

• An increase in government spending led to more rationing of consumers, a decrease in labor supply, and a decrease in output

• Dead end 19

From 1940 to 1980From 1940 to 1980• The Casual treatment of imperfections (2)

According to Sargent (1973) under rational– According to Sargent (1973), under rational expectations the effects of money on out-put lasted only for a brief moment

• until the relevant information about money was released

• Respuesta a la crisis en los 1970s. Dos rutasN Cl i l– New Classicals

• Necesario repensar la macro desde sus inicios– New KeynesiansNew Keynesians

• Las intuiciones de Keynes eran básicamente correctas– Macroeconomists looked more divided than ever

• 20 años después convergencia de las 2 rutas20

Post 1980 IPost 1980 I

• Exploration often feels like confusionExploration often feels like confusion– and confusion there indeed is.

But behind it may be one of the most• But behind it may be one of the most productive periods of research in macroeconomicsmacroeconomics

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Post 1980 I. Working out the quantity theory

• Why does money affect output?Why does money affect output?– The old Business Cycle questions:

• What are the major shocks that affect output?• What are the major shocks that affect output? What are their propagation mechanisms?

• What is the role of imperfections in that context?

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• An earlier hypothesis for slow• An earlier hypothesis for slow adjustment of individual prices, d l d b L [1973]developed by Lucas [1973], – and based on incomplete information

rather than staggering, • has been largely abandoned

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• Staggering and the adjustment of theStaggering and the adjustment of the price level

In most cases discrete adjustment of– In most cases, discrete adjustment of individual prices leads indeed to a slow adjustment of the price levelj p

• And the more each desired price depends on other prices, the slower the adjustment.

– The effects of money on output are likely to be shorter, the higher the rate of i fl tiinflation

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– Real and Nominal RigiditiesReal and Nominal Rigidities• "Real rigidities" (a small elasticity of the

desired relative price to shifts in demand) – are needed to generate substantial "nominal rigidity" (a

slow adjustment of the price level in response to changes in money).

» any motive for avoiding relative-price changes would exacerbate the sluggishness of nominal prices

• There are market structures where this will be e e a e a et st uctu es e e t s bethe case

– a typical assumption in recent research has been one of monopolistic competitionmonopolistic competition

26


–Money as numeraire and medium–Money as numeraire and medium of exchange• "menu costs"

–small individual costs of changing prices can have large macroeconomic effects

–public relations disaster»It makes the explanation for the

effects of money on output look id t laccidental

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Post 1980 II. The Role of other imperfections






• Imperfections lead to very different efficiency and p y ywelfare characteristics of the equilibrium– Is the equilibrium level of unemployment too low or too

high?• Imperfections may lead to very different propagation

mechanisms of shocks– Nominal and/or real rigiditiesNominal and/or real rigidities

• Imperfections may lead to new sources of shocks– E.g. bank runs

The arguments would be even stronger if the focus• The arguments would be even stronger if the focus of this article were extended to cover growth– Externalities in R&D– Patent laws– Restrictions to entry of new firms 29


• Unemployment in the labor market, FriedmanUnemployment in the labor market, Friedman [1968] – "The natural rate of unemployment is the level

hi h ld b d t b th W l iwhich would be ground out by the Walrasian system of general equilibrium equations, provided that there is imbedded in them the actual structural characteristics of the labor and commodity markets, including market imperfections stochastic vari-ability in demandsimperfections, stochastic vari-ability in demands and supplies, the cost of gathering informationabout job vacancies and labor availabilities, the

t f bilit d “costs of mobility, and so on.“30

• What we have done is to go fromWhat we have done is to go from this quote to a formal framework in which the role of each of these factorswhich the role of each of these factors (and many others) can be understood and then taken to the dataand then taken to the data

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• labor market as a decentralized marketlabor market as a decentralized market,– in which there were workers looking for

jobsjobs, – and firms looking for workers.

• In such a market there would always• In such a market, there would always be, even in equilibrium,

b th l t d– both some unemployment and some vacancies.

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• This line of research has shown forThis line of research has shown for example

how higher employment protection leads– how higher employment protection leads to lower flows in the labor market,

• but also to longer unemployment duration.but also to longer unemployment duration.

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• our improved understanding of the determinants of the t l t f l t h t t l t d i t hnatural rate of unemployment has not translated into a much

better understanding of the dynamic relation between wages and labor market conditions. – we have not made much progress since the Phillips curve.we have not made much progress since the Phillips curve.

• current theoretical models appear to imply a stronger and faster adjustment of wages to labor market conditions than is the case in the data.

h i ll i b h l– they typically are not spot transactions, but rather long-term relations between workers and firms.

• Long-term relations often allow for better outcomes, for reasons emphasized by the theory of repeated games.reasons emphasized by the theory of repeated games. – For example, they may allow the wage to play less of an

allocational role, more of a distributional or insurance role

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• That firms might want to develop aThat firms might want to develop a reputation for good behavior and, by so doing achieve a more efficientdoing, achieve a more efficient outcome, is indeed one of the themes of the research on "efficiency wages"of the research on efficiency wages .

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• Saving, investment and creditg– Issues of financial intermediation, from "credit crunches" to

"liquidity scrambles", figured heavily in the early accounts of fluctuations.

– With the introduction of the IS-LM model, the focus shifted away.

• Issues of financial intermediation were altogether absent from the IS-LM model and most of its descendantsthe IS-LM model and most of its descendants.

– The treatment of financial intermediation in larger models was often schizophrenic

– Recent research as returning to old themes, but with better tools (asymmetric information) and greater clarity

• El papel de colaterales y liquidez– En inversión y coinsumo

• Will the economy provide the required marketable assets? – Financial intermediaries

• Scope for financial intermediaries– Diamond and Dybvig [1983] necessary conditions for bank runs 36


– Increasing returns o counter-cyclical mark-Increasing returns o counter cyclical markups

• Firms may be willing to supply more goods at roughly the same price, leading to longer lasting and larger effects of shifts in aggregate demand on outputdemand on output

– Larger impact of money on output

37


– Expectations as drifting forcesp g• movements in expectations as an important

source of fluctuations, is once again an old oneone.

– It was a dominant theme of pre-1940 macroeconomics.

– It was a major theme in Keynes, and beyond.• but, with the introduction of rational

expectations in the 1970s, expectations p , pbecame fully endogenous, and the theme was lost

Lots of research on behavioral finance– Lots of research on behavioral finance– The role of expectations, fads or bubbles

in asset markets in the last crises (e.g 38

Macro in the near future• Nearly 20 years later, the routes have surprisingly

converged.converged.– The methodological contributions of the Real Business

Cycle approach• namely the development of stochastic dynamic general• namely the development of stochastic dynamic general

equilibrium models, – have proven important and have been widely adopted.

– But the initial propositionsBut the initial propositions • that money did not matter, • that technological shocks could explain fluctuations, • and that imperfections were not needed to explain fluctuations• and that imperfections were not needed to explain fluctuations

– have not held up:

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Macro in the (near) futureMacro in the (near) future– Which imperfections

Research on labor markets focuses on• Research on labor markets focuses on decentralization and bargaining;

• research on credit markets focuses on asymmetric yinformation;

• research on goods markets on increasing returns; • research on financial markets on psychology

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Macro in the (near) futureMacro in the (near) future

• Policy and welfarePolicy and welfare– One striking implication of recent models

is how much more complex the welfareis how much more complex the welfare implications of policy are

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Macro in the (near) futureMacro in the (near) future– The medium runThe medium run

• Phenomena such as the long period of high unemployment in Europe in the last 25 years, or the behavior of output during the transition in Eastern Europe, do not fit easily into either business cycles or growthy g

43

Macro in the (near) futureMacro in the (near) future– Macroeconomics and institutionsMacroeconomics and institutions

• the role of labor market institutions in explaining European unemployment

• the role of legal structures in explaining the evolution of output in transition economies

• Institutions also matter for short run• Institutions also matter for short run fluctuations

– with different institutions leading to different gshocks and propagation mechanisms across countries

» Johnson et al [1999]: Asian governments with» Johnson et al. [1999]: Asian governments with weakest governance institutions suffered the largest exchange rate declines 44

Macro in the (near) future: Current debates

– most macroeconomic research today focuses on ythe macroeconomic implications of some imperfection or another.

– At the frontier of macroeconomic research, theAt the frontier of macroeconomic research, the field is surprisingly a-ideological

– Should we only use fully specified dynamic general equilibrium models?general equilibrium models?

• I believe that small models are indeed underused and undertaught

Test: how much use was macroeconomic– Test: how much use was macroeconomic research in understanding, for example, and helping resolve the Asian crisis of the late 1990s?

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LecturasLecturasBlanchard,O. (2000)Mankiw, G.N. (1990)Mankiw, G., (2006) Krugman, P. (1994)Krugman, P. (1994)Chari, V. V. & P. J. Kehoe, (2006)El debate en AER (1997)

Blanchard O (1997)Blanchard, O., (1997)Blinder, Alan S. (1997)Taylor, J., (1997) Solow,R (1997) Eichenbaum, M., (1997)

Keynes, Teoría Generaly ,Romer, D. & C. Romer, (2002)Conclusiones para nuestra Macro 2 46

Mankiw (1990), “A quick refresher course”

• IntroductionA P bl f M i• A Parable for Macroeconomics

• The Breakdown of the Consensus• Directions of Research

– ExpectationsExpectations• Policy Irrelevance• Rules vs Discretion• Rational Expectations and Empirical Work

N Cl i l M d l– New Classical Models• Imperfect Information• Real Business Cycles• Sectoral Shifts

– New Keynesian Macroeconomics• Fixed Prices and General Disequilibrium• Labor contracts and sticky wages

Monopolistic competition and sticky prices• Monopolistic competition and sticky prices• Conclusion

47


• Introduction– The theoretical developments of the past

twenty years have had relatively little impact on applied macroeconomicsimpact on applied macroeconomics.

– The view of some academics is that practitioners have simply fallen behind the

fstate of the art• it violates a fundamental property of economic

equilibrium: q– It as-sumes that a profit opportunity remains

unexploited• If recent developments in macroeconomics p

were useful for applied work, they should have been adopted. 48

• A Parable for MacroeconomicsA Parable for Macroeconomics– Ptolemy vs the original Copernican system

• For predicting the positions of the planets the• For predicting the positions of the planets, the Ptolemaic system was superior

– It would have been foolhardy to navigate your ship by the more promising yet less accurate Copernican system

49

• The Breakdown of the Consensus.The Breakdown of the Consensus. Se requirió, simultáneamente– que Friedman, Phelps y Lucas q p y

presentaran sus demoledoras críticas

l lid d fi di h– que la realidad confirmara dichas críticas• Se pasó de una curva de Phillips• Se pasó de una curva de Phillips

perfecta en los 60s a una nuve de puntos aleatorios en los años pposteriores

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Existe una relación permanente entre la producción e i fl ió ? (USA 1960 69)inflación? (USA 1960-69)

51

Pero…inflación y el desempleo en Estados U id 1970 1998Unidos, 1970-1998

52

La curva de phillips ampliada por t ti j l lt dexpectativas…mejoran los resultados

( )e h u uπ π− = −

53

Curva de Phillips en AlemaniaCurva de Phillips en Alemania

54

Curva de Phillips en el área del EuroCu a de ps e e á ea de u o

astonishingly vertical 55

La curva de Phillips en Colombia 1990:1-1999:4

1990

1990

1999

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Curva de Phillips en Colombia?Curva de Phillips en Colombia?1980 1989−

2000 2006−

1990 1999−

57

InglaterraInglaterra

58

InglaterraInglaterra

59

Inglaterra

60








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Directions of Research: t tiexpectations

• Policy Irrelevance: Sargent & Wallace:– Sargent & Wallace:

• people cannot be surprised by events that occur systematically or by policies that are applied in a uniform and consistent fashionuniform and consistent fashion

– Fischer's model• in which sticky wages play a crucial role

produces Keynesian policy prescriptions despite the– produces Keynesian policy prescriptions, despite the presence of rational expectations

• Rules vs Discretion (Bancos Centrales)– The surprising implication of this analysis is that

policy makers can sometimes better achieve their own goals by having their discretion taken away from them

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• Rational Expectations and Empirical Work: Hall. p pChanges in consumption should be unpredictable– Hall concluded that the evidence strongly favored

the permanent income hypothesisp yp• And the evidence has shown that current income has a

stronger influence on consumption than the permanent income hypothesis predicts

» In retrospect it is clear that Hall's contribution was more» In retrospect, it is clear that Hall s contribution was more methodological than substantive.

– Hall changed forever the terms of the debate

63

= + +

+ +2 2 (1 )

(1 )( )

C Y r SY r Y C= + + −

⇒ + + = + +

⇒ + = +

2 1 1

1 2 2 1

2 2

(1 )( )

(1 ) (1 )

Y r Y Cr C C Y r Y

C YC Y⇒ + = ++ +1 11 1

C Yr r

2C

1C

Cambio en l i

Fisher: el ingreso permanente (Y1↑ & y2 ↑

Current consumption depends only on the present value of lifetime income.

The timing of income isThe timing of income is irrelevant because the consumer can borrow or lend between periods.

Ef d iFigure 16.6 An Increase in IncomeMankiw: Macroeconomics, Sixth EditionCopyright © 2007 by Worth Publishers

Efectos de un incremento en r:c2↑; C1? (efectos

ingreso y sustitución)

Figure 16.2 The Consumption Puzzle

Por qué puede ser importante el ingreso i t ? ( t i i d li id )corriente? (restricciones de liquidez)

66








67

New Classical ModelsNew Classical Models– The goal of the new classical revolutionThe goal of the new classical revolution

• was to rebuild macro-economics beginning– with microeconomic primitives of preferences p p

and technology– Imperfect Information

• received much attention in the 1970s, – it has attracted few adherents in more recent

yearsyears» The empirical evidence has also been generally

unfavorable (Barro and Zvi Hercowitz 1980; Mishkin 1983)1983).

68

New Classical ModelsNew Classical Models

• Real Business CyclesReal Business Cycles– Strengths

• highly parsimonious• highly parsimonious• rigorously founded• mimic the behavior of important economic time p

series surprisingly well

69

New Classical ModelsNew Classical Models– Real Business CyclesReal Business Cycles

• Weakness– technological regress?g g– require that leisure be highly substitutable over

timefli t ith t i t di– conflicts with many econometric studies

– It also conflicts with the strong prior beliefs of many economists that high unemployment inmany economists that high unemployment in recessions is largely involuntary.

– monetary policy is irrelevant for economic fluctuations.

70

New Classical ModelsNew Classical Models• Sectoral Shifts and the business cycle

– costly adjustment of labor among sectors– recessions are periods during which there are

more sectoral shocks and thus a greater need for gsectoral adjustment

– the available evidence appears not to support the sectoral shift theory. y

• we would expect to find high unemployment coinciding with high job vacancy.

– although the sectoral shift theory suggests that workers g y ggare moving between sectors during recessions, the opposite appears to be the case

» The measured movement of workers is strongly procyclicalprocyclical

71





N Cl i l M d l– New Classical Models• Imperfect Information• Real Business Cycles• Sectoral ShiftsSectoral Shifts

– New Keynesian Macroeconomics• Fixed Prices and General Disequilibrium• Labor contracts and sticky wages• Monopolistic competition and sticky prices

• Conclusion72

Mankiw (1990)Mankiw (1990)

– New Keynesian MacroeconomicsNew Keynesian Macroeconomics• Fixed Prices and General Disequilibrium• Labor contracts and sticky wagesy g• Monopolistic competition and sticky prices

73

• If there is a single theme that unitesIf there is a single theme that unites Keynesian economics,

it is the belief that economic fluctuations– it is the belief that economic fluctuations reflect not the Pareto-efficient response of the economy to changes in tastes and y gtechnology,

• but rather some sort of mar-ket failure on a grand scale.

74

Mankiw (1990)Mankiw (1990)

– New Keynesian MacroeconomicsNew Keynesian Macroeconomics• Fixed Prices and General Disequilibrium• Labor contracts and sticky wagesy g• Monopolistic competition and sticky prices

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• If wages are rigidIf wages are rigid– Sargent – Wallace policy irrelevance

conclusions under rational expectationsconclusions under rational expectations do not hold

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Labor contracts and sticky wages

• The primary appeal of these models is that they mirror observed institutions

• models based on nominal wage contracts were criticized on three grounds– First, the existence of such contracts is never explained

from microeconomic principles. • If these nominal wage contracts are responsible for large

and inefficient fluctuations in output and employmentand inefficient fluctuations in output and employment, why do workers and firms write these contracts?

– Second, despite the existence of labor contracts determining nominal wages in advance,determining nominal wages in advance,

• it is not obvious that these wages play an important role in the de-termination of employment, as these models assume

• Many workers hold life-time jobsa wage paid in any given period need not equal the marginal product of– a wage paid in any given period need not equal the marginal product of labor

– like an installment payment– Third, real wages are not anti-cyclical

77

Los salarios no son anti-cíclicos

78

Mankiw (1990)– New Keynesian Macroeconomics

• Fixed Prices and General Disequilibrium• Labor contracts and sticky wages• Monopolistic competition and sticky prices

– Monopolistically competitive firms do not have much incentive p y pto cut their prices when the demand for their goods declines

– This emphasis on the goods market can avoid the three problems that plagued the Keynesian model based on sticky wages alone

» Rigorous explanation of rigidities» Prices are not installment payments» Do not imply counter-cyclical real wages

– But Keynesians do not embrace an equilibrium labor market» efficiency wage

79

Supuestos alternativos sobre la rigidez de l i isalarios y precios

Salarios Nominales

Precios Mercado Laboral

Mercado de Bienes

1 Rígidos Flexibles

2 Flexibles Rígidos Competitivo Competencia2 Flexibles Rígidos Competitivo Competencia imperfecta

3 Flexibles Rígidos Imperfecci-3 Flexibles Rígidos Imperfecciones reales

4 Rígidos Flexibles Competencia imperfecta

80

Rigideces de PreciosRigideces de Preciosa) Costos de menùa) Costos de menù

b) Externalidadsi cada

d tproductor mantiene sus precios constantes, hay

max1ymax

2y

, yuna externalidad.

M/P no se expandeexpande

81

´

(5.27)

( ) 0 (5 28)

P PWL L L

=

⎛ ⎞= >⎜ ⎟

Ymax: el costo

i l , (.) 0 (5.28)s sL L LP

= >⎜ ⎟⎝ ⎠

marginal coincide con el ingreso ingreso marginal (precio)

Salario de eficienciaSa a o de e c e c a

W* es el salario real de fi i ieficiencia

83

Exceso de oferta laboral (desempleo) cuando hay l i d fi i isalarios de eficiencia

84

( ) -salario de eficiencia-W w L=W ( ) salario de eficienciaw LP

Oferta laboral

WP

L

85

El nivel de empleo es E en

La l ti id d empleo es E, en

la intersección entre la función de salario real y l d d

elasticidad de la oferta laboral ya no determina la

t d l la demanda efectiva

El desempleo

respuesta del salario real a la demanda

aparece representado por la distancia EA en el diagrama…y el g ydesempleo crece cuando la demanda efectiva caecae.

Hay desempleo involuntario

86

Mankiw (2006) “Scientist and Engineer”

• The Keynesian RevolutionThe Keynesian Revolution• The New Classicals• The New Keynesians• The New Keynesians• Digression and Vitriol

A N S th i T ?• A New Synthesis, or a Truce?• The View from Central Banking• The View from Fiscal Policy• Inside the Classroom• Not a Dentist in Sight

88


• My premise is that the field has evolvedMy premise is that the field has evolved through the efforts of two types of macroeconomist– those who understand the field as a type

of engineering – and those who would like it to be more of a

science. • Engineers are first and foremost problem• Engineers are, first and foremost, problem-

solvers.• By contrast, the goal of scientists is to

d t d h th ld kunderstand how the world works89

• While the early macroeconomists wereWhile the early macroeconomists were engineers trying to solve practical problems, the macroeconomists of the past several decades h b i t t d i d l ihave been more interested in developing analytic tools and establishing theoretical principles.principles. – These tools and principles, however, have been

slow to find their way into applications.• The substantial disconnect between the science

and engineering of macroeconomics should be a humbling fact for all of us working in the fieldhumbling fact for all of us working in the field

90

• Neither scientists nor engineers have aNeither scientists nor engineers have a claim to greater virtue.

• The world needs both scientists and• The world needs both scientists and engineers

91

• The division of economists betweenThe division of economists between new classicals and new Keynesians is not fundamentally between thenot, fundamentally, between the political right and the political left.

To a greater extent it is a split between– To a greater extent, it is a split between pure scientists and economic engineers

92


• The problem that gave birth to our field—theThe problem that gave birth to our field the Great Depression of the 1930s— was an economic downturn of unprecedented scale, including incomes so depressed and unemployment so widespread that it is no

ti t th t th i bilit f thexaggeration to say that the viability of the capitalist system was called in question

In 1933 the U S unemployment rate reached 25– In 1933, the U.S. unemployment rate reached 25 percent,

– and real GDP was 31 percent below its 1929 level

93




94

The Keynesian RevolutionThe Keynesian Revolution• Keynes and the Keynesian modelKeynes and the Keynesian model

builders had the perspective of engineers. g– They were motivated by problems in the

real world, and once they developed their th i th t t th i ttheories, they were eager to put them into practice.

95




96

The New ClassicalsThe New Classicals

• The first wave of new classicalThe first wave of new classical economics was monetarism

Friedman & Schwartz Monetary History of– Friedman & Schwartz Monetary History of the United States:

• instability should be traced not to privateinstability should be traced not to private actors but rather to inept monetary policy

• Simple rules (e.g annual money growth=3%)– Friedman y la función consumo

• If the marginal propensity to consume out of t it i i lltransitory income is small,

– then fiscal policy would have a much smaller impact on equilibrium income than many

97

• El ataque de Friedman y Phelps (yEl ataque de Friedman y Phelps (y luego Lucas) a la curva de Phillps

Money illusion– Money illusion– Expectations center stage

L S t t l• Lucas y Sargent y su ataque a la política monetaria

B i i i ibl i– Because it is impossible to surprise rational people systematically

systematic monetary policy aimed at stabilizing• systematic monetary policy aimed at stabilizing the economy is doomed to failure 98

The New Classicals (2)The New Classicals (2)

• The third wave of new classicalThe third wave of new classical economics was the real business cycle theories of Kydland and Prescott (1982)theories of Kydland and Prescott (1982) and Long and Plosser (1983).

dynamic examples of Arrow-Debreu– dynamic examples of Arrow-Debreu general equilibrium theory

• the field of macroeconomics becamethe field of macroeconomics became increasingly rigorous and increasingly tied to the tools of microeconomics.

99




100

The new classicalsThe new classicals• Lucas (1980) "The Death of Keynesian ( ) y

Economics:– "One cannot find good, under-forty economists who

identify themselves or their work as `Keynesian'identify themselves or their work as Keynesian . • Indeed, people even take offense if referred to as `Keynesians'.

– At research seminars, people don't take Keynesian theorizing seriously anymore;theorizing seriously anymore;

• the audience starts to whisper and giggle to one another

• Yet, just as Lucas was happily writing the eulogy for Keynesian economics the profession was about toKeynesian economics, the profession was about to welcome a generation of "new Keynesians.”

101

• By 1982 Edward Prescot of Carnegi-By 1982 Edward Prescot of Carnegi-Mellon University would proudly declare that studentes of his universitydeclare that studentes of his university never heard Keyne’s name

102

El debate de los 1970sEl debate de los 1970s• "foolishly restrictive" for the new classicalfoolishly restrictive for the new classical

economists to rule out by assumption the existence of wage and price rigidities and the possibility that markets do not clear. – "I remember reading once that it is still not

d t d h th i ff tunderstood how the giraffe manages to pump an adequate blood supply all the way up to its head; but it is hard to imagine that anyone would therefore conclude that giraffes do not have long necks.“

103

• Solow explained his unwillingness to engageSolow explained his unwillingness to engage with the new classical economists: – "Suppose someone sits down where you are

sitting right now and announces to me that he is Napoleon Bonaparte.

• The last thing I want to do with him is to get involved in a• The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Baffle of Austerlitz.

• If I do that I'm getting tacitly drawn into the game that heIf I do that, I m getting tacitly drawn into the game that he is Napoleon Bonaparte."

104

• Lucas :Lucas :– "I don't think that Solow, in particular, has

ever tried to come to grips with any ofever tried to come to grips with any of these issues except by making jokes”

105

The New KeynesiansThe New Keynesians• The neoclassical-Keynesian synthesis isThe neoclassical Keynesian synthesis is

coherent, but it is also vague and incomplete. – While the new classical economists responded to

th d f t b j ti th th i d t tithese defects by rejecting the synthesis and starting afresh, the new Keynesian economists thought there was much to preserve.

• Was this work also successful as a matter of engineering? Did it help policymakers devise better policies to cope with the business cycle? The judgment here must be less positive

106




107

Digression and VitriolDigression and Vitriol– From the standpoint of science, the greater rigor p , g g

that the new classicals offered has much appeal. But from the standpoint of engineering, the cost of this added rigor seems too much to bearof this added rigor seems too much to bear

– Not surprisingly, many young economists chose to avoid taking sides in this dispute by turning their attention away from economic fluctuations and toward other topics.

• Also new tools (P Romer y R Lucas); new data (Also, new tools (P.Romer y R.Lucas); new data (Summers & Heston); was the cycle dead in the US?

108




109

A New Synthesis, or a Truce?A New Synthesis, or a Truce?• An old adage holds that science progresses funeral by

funeral. Today, with the benefits of longer life expectancy, it would be more accurate (if less vivid) to say that science progresses retirement by retirement

• a new consensus has emerged about the best way to understand economic fluctuations. Marvin Goodfriend and Robert King (1997) have dubbed this consensus view "the ne neoclassical s nthesis ""the new neoclassical synthesis." – This synthesis model has been widely applied in research

on monetary policy (Clarida, Gali, and Gertler, 1999, and McCallum and Nelson 1999) The most extensive treatmentMcCallum and Nelson, 1999). The most extensive treatment of this new synthesis is Michael Woodford's (2003) monumental (in both senses of the word) treatise

110

A New Synthesis, or a Truce?A New Synthesis, or a Truce?• It is tempting to describe the emergence of thisIt is tempting to describe the emergence of this

consensus as great progress. In some ways, it is.– But there is also a less sanguine way to view the

current the current state of play. • Perhaps what has occurred is not so much a• Perhaps what has occurred is not so much a

synthesis as a truce between intellectual combatants, followed by a face-saving retreat

b th idon both sides. • Both new classicals and new Keynesians can

look to this new synthesis and claim a degreelook to this new synthesis and claim a degree of victory, while ignoring the more profound defeat that lies beneath the surface. 111

A New Synthesis, or a Truce?A New Synthesis, or a Truce?• The heart of this new synthesis— a dynamic

l ilib i i h i lgeneral equilibrium system with nominal rigidities— is precisely what one finds in the early Keynesian models.– Hicks proposed the IS-LM model, for example, in

an attempt at putting the ideas of Keynes into a general equilibrium setting. (Recall that Hicks won the 1972 Nobel Prize jointly with Kenneth Arrowthe 1972 Nobel Prize jointly with Kenneth Arrow for contributions to general equilibrium theory.)

– Klein, Modigliani, and the other model-builders were attempting to bring that general equilibriumwere attempting to bring that general equilibrium system to the data to devise better policy.

• To a large extent, the new synthesis picks up the research agenda that the profession abandonedresearch agenda that the profession abandoned, at the behest of the new classicals, in the 1970s.

112

A New Synthesis, or a Truce?A New Synthesis, or a Truce?• With the benefit of hindsight, it is clear that the g ,

new classical economists promised more than they could deliver.

Their stated aim was to discard Keynesian– Their stated aim was to discard Keynesian theorizing and replace it with market-clearing models that could be convincingly brought to the data and then used for policy analysisdata and then used for policy analysis.

– By that standard, the movement failed. Instead, they helped to develop analytic tools that are now b i d t d l th ti fbeing used to develop another generation of models that assume sticky prices and that, in many ways, resemble the models that the new l i l i i i tclassicals were campaigning against.

113

• The new Keynesians can be criticized for having y gtaken the new classicals' bait and– as a result, pursuing a research program that turned out to

be too abstract and insufficiently practicalbe too abstract and insufficiently practical• Paul Krugman (2000) :

– "One can now explain how price stickiness could happen• But useful predictions about when it happens and when it does not,• or models that build from menu costs to a realistic Phillips curve,

– just don't seem to be forthcoming."

114




115

The View from Central Banking

• Laurence Meyer's charming memoir A Term at the y gFed. In 1996, – Meyer left his job as an economics professor at Washington

University and as a prominent economic consultant to serveUniversity and as a prominent economic consultant to serve for six years as a governor of the Federal Reserve

– Recent developments in business cycle theory, promulgated by both new classicals and new Keynesianspromulgated by both new classicals and new Keynesians, have had close to zero impact on practical policymaking.

• Kydland & Prescott, bancos centrales y t i ?transparencia?– Inflation targeting? Greenspan avoided any announcement

of a policy rule

116




117

• Mankiw at the Council of EconomicMankiw at the Council of Economic Advisers

mainstream macroeconometric model– mainstream macroeconometric model• descendents of the early modeling efforts of

Klein, Modigliani, and Eckstein, g ,

118

Mankiw (2006) “Scientist and Engineer”• The Keynesian Revolution

• The New Classicals• The New Classicals• The New Keynesians

Digression and Vitriol• Digression and Vitriol• A New Synthesis, or a Truce?• The View from Central Banking• The View from Fiscal Policy• Inside the Classroom• Not a Dentist in Sightg

119

Inside the ClassroomInside the Classroom• Like policymakers, undergraduates typically have p y , g yp y

little interest in theory for theory's sake. • Failures of Barro (19 ) Macroeconomics

– New Classicals• A generation ago, the three leading texts for this

course were those by Robert Gordon, Robert Hallcourse were those by Robert Gordon, Robert Hall and John Taylor, and Rudiger Dombusch and Stanley Fischer. Today, the top three sellers are those written by Olivier Blanchard Andrew Abel andthose written by Olivier Blanchard, Andrew Abel and Ben Bemanke, and myself– each of these six books was written by at least one

economist with graduate training from MIT, a prominent engineering school where the dominant macroeconomic tradition was that of Samuelson and Solow

120

Mankiw (2006) “Scientist and Engineer”• The Keynesian Revolution

• The New Classicals• The New Classicals• The New Keynesians

Digression and Vitriol• Digression and Vitriol• A New Synthesis, or a Truce?• The View from Central Banking• The View from Fiscal Policy• Inside the Classroom• Not a Dentist in Sightg

121

• Not a Dentist in SightNot a Dentist in Sight– John Maynard Keynes (1931) famously opined

that, "If economists could manage to get th l th ht f h bl t tthemselves thought of as humble, competent people on a level with dentists, that would be splendid." He was expressing a hope that the p p g pscience of macroeconomics would evolve into a useful and routine type of engineering.

• In this future utopia avoiding a recession would be as• In this future utopia, avoiding a recession would be as straightforward as filling a cavity.

– As we look ahead, humble and competent remain id l t d hi h i t iideals toward which macroeconomists can aspire.

122

LecturasLecturasBlanchard,O. (2000)Mankiw, G.N. (1990)Mankiw, G.N. (1990)Mankiw, G., (2006) Krugman, P. (1994)Ch i V V & P J K h (2006)Chari, V. V. & P. J. Kehoe, (2006)El debate en AER (1997)

Blanchard, O., (1997)( )Blinder, Alan S. (1997)Taylor, J., (1997) Solow R (1997)Solow,R (1997) Eichenbaum, M., (1997)

Keynes, Teoría GeneralR D & C R (2002)Romer, D. & C. Romer, (2002)Conclusiones para nuestra Macro 2 123

Keynesianismo infantilKeynesianismo infantil • People decide to hold more cashPeople decide to hold more cash

– Gastan menos y el ingreso cae (el ingreso depende del gasto)

• Y si aùn quiere tener màs cash, tendrà que recortar el gasto aùn màs

• Baby sitting coop to look after each other`sBaby sitting coop to look after each other s children– Self regulatory bookkeeping system by issuing g y p g y y g

scrip: coupons worth one houf of baby-sitting.– Every hour of baby sitting would involve a

transfere of a coupont to the baby sitters from thetransfere of a coupont to the baby-sitters from the baby-sitees 124

• After the coop had been in existence forAfter the coop had been in existence for some time, it got into trouble– For some reason the number of coupons in

circulation per couple became rather low.• People tried to increase their reserves by baby sitting

moreo e– Increasingly difficult to find chances to earn coupons,

which further reinforced the mood of caution

The coop got itself into a recession• The coop got itself into a recession– La salid, imprimir màs bonos

125

• But monetary policy could not beBut monetary policy could not be enough

Expanded role of the state and fiscal– Expanded role of the state and fiscal policy

• Keynes was not a socialist nor were• Keynes was not a socialist nor were most of his followers; they saw their ideas as a way to make capitalism runideas as a way to make capitalism run better, not a reason to replace it

126



Keynes, Teoría GeneralR D & C R (2002)Romer, D. & C. Romer, (2002)

127

Chari, V. V. & P. J. Kehoe, (2006)

• Modern Theoretical Developments– Expectations and Macroeconomic Policy Analysis– The Time Inconsistency Problem

• Optimal Rules and Monetary Policy• Optimal Rules and Monetary Policy– Optimal Rules for Monetary Policy– The Evolution of Monetary Policy

O ti l R l d Fi l P li• Optimal Rules and Fiscal Policy– Principles and Properties of Optimal Tax Systems– The Practice of Fiscal Policyy

• Extending the Bounds of Macroeconomics– Taxes

Unemployment benefits– Unemployment benefits128

Bancos Centrales Independientes

129

Inflation Targeting y Reducción de la I fl ióInflación

130

Marginal TaxesMarginal Taxes

131

Desempleo y legislación laboralDesempleo y legislación laboral

132

LecturasBlanchard,O. (2000)Mankiw, G.N. (1990)Mankiw G (2006)Mankiw, G., (2006) Krugman, P. (1994)Romer, D. & C. Romer, (2002)Chari, V. V. & P. J. Kehoe, (2006)El debate en AER (1997)

Blanchard, O., (1997), , ( )Blinder, Alan S. (1997)Taylor, J., (1997) Solow R (1997)Solow,R (1997) Eichenbaum, M., (1997)

Keynes, Teoría GeneralRomer & RomerConclusiones para nuestra Macro 2 133

Blanchard (1997)Blanchard (1997)• In the short run, movements in economic activity are

dominated by movements in aggregate demand– But over time, the economy tends to return to a steady-state

growth path• Short run vs long run (mensajes diferentes)

– In the short run, larger budget deficits can increase output and investment; but in the long run, they decrease capital and output

– In the short run, higher money growth can increase output; but in the long run, it is more likely to decrease it (or neutral)

• These intertemporal changes in sign are what makes macroeconomic policy often so heated

• The Medium and the long run– Imperfections play a central role (e.g. R&D)

134

Qué tan expansionista fue el gasto úbli C l bi l 1990 ?

25

público en Colombia en los 1990s? ColombiaEuropean Union

20

ColombiaEuropean Union

10

15 Latin America

5

10Mexico

0

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Fuente: Banco Mundial , General government final consumption expenditure , % of GDP) 135

Blinder (1997)Blinder (1997)• La IS

– Relativamente sólida• Pero no son claros los canales pues la función

de inversión fija privada es poco elástica a lade inversión fija privada es poco elástica a la tasa de interés real

– Quizá la construcción y los bienes de consumo durables?durables?

– El canal del crédito?• La LM

– Extremádamente volátil• Ha desaparecido de los libros de texto• En lugar se utiliza la idea de que los bancos• En lugar se utiliza la idea de que los bancos

centrales fijan la tasa de interés en el corto plazo (MP, monetary policy) 136

Análisis de VARAnálisis de VAR

137

La IS y el canal del crédito. Análisis de VAR para un incremento en R (tasa de interés)

some important components of spending do not begin to react until after most of the interest rate effect is pastpast

the most rapid (and in per-centage terms, by far the strongest) effect of monetary policy is on residential investmentThis finding is puzzlingThis finding is puzzling because residential investments are typically very long-lived

138

La curva MP y el Cambio a una política monetaria más restrictivapolítica monetaria más restrictiva

Cuando y es bajo el banco central coloca las tasas de interés bajas y viceversaCuando la inflación se dispara el banco central sube sus tasas de interés

2 0: ( , )MP r r y π=

1 1 1 0: ( , );MP r r y π π π= >

Mercado Monetario (MP Taylor monetary policy)

139

Mercado Monetario (MP-Taylor - monetary policy)( , ); parámetro de desplazamiento r r y π π=

Blinder (1997)Blinder (1997)

• El esquema de oferta y demandaq y– Supone que los salarios son relativamente rígidos– Y que los precios rápidamente ajustan la oferta y

la demanda agregadala demanda agregada• En la práctica, precios y salarios son

excesivamente rígidos• Curva de Phillips

– the empirical Phillips curve has worked amazingly well for decadeswell for decades

– This reliable Phillips curve displays a high degree of inertia (empirically, long lags) and has the natural rate property: it is vertical in the long runnatural-rate property: it is vertical in the long run

140


• Ley de OkunLey de Okun– Okun's Law, is even more atheoretical, if

not indeed antitheoreticalnot indeed antitheoretical.– Nonetheless, it closes the loop between

real output growth and changes inreal output growth and changes in unemployment with stunning reliability.

141

Blinder (1997)Blinder (1997)• My candidate core model: four main components.

– First, prices and wages are largely predetermined in the short run

• and evolve according to Phillips-type equations.Second output is demand determined in the short run– Second, output is demand-determined in the short run.

– Third, aggregate demand • responds directly to fiscal policy • and is interest-sensitiveand is interest sensitive

– and thus responsive to monetary policy, which sets short-term interest rates.

– Fourth, Okun's law li k t t th t h i th l t• links output growth to changes in the unemployment rate.

142


• the Volcker disinflation and the Reaganthe Volcker disinflation and the Reagan deficits went by the book:

in true Mundell-Fleming fashion the– in true Mundell-Fleming fashion, the slowdown in money growth produced high nominal and real interest rates, a large , grecession, and a dollar appreciation

• The Reagan deficitsThe Reagan deficits – led to an expansion of output, high real

interest rates, a dollar appreciation, and , pp ,large trade deficits

143


• Otro elemento del consenso podría serOtro elemento del consenso podría ser– La política anticíclica de corto plazo se

hace con política monetaria y no conhace con política monetaria y no con política fiscal

• La política fiscal es excesivamente rígidap g

144

Blinder (1997)Blinder (1997)• The notion that what used to be called

"contractionary" fiscal policies may in fact be expansionary is fast becoming part of the conventional policy wisdomconventional policy wisdom– Algunos ejemplos recientes

• Clinton (1993)• Irlanda y Dinamarca

– “crdible, future and expectations”Existen ejemplos recientes de que el menor gasto– Existen ejemplos recientes de que el menor gasto público puede incrementar el crecimiento de largo plazo

E l l l l t lt d t i t• En el largo plazo el gasto alto va en detrimento del crecimiento 145

• Solow y Taylor parecerían estar deSolow y Taylor parecerían estar de acuerdo con partes de este diagnóstico con algunas adicionescon algunas adiciones

• SolowC i i t d i b th l id f– Crecimiento: driven by the supply side of the economy

146

Solow (1997)Solow (1997)

• Proper modeling strategyProper modeling strategy– how much formal optimization is

appropriate in order to provide a solidappropriate in order to provide a solid underpinning to macroeconomics

• Whatever works empiricallyp y– Argument unsettled

147


• The Term Structure of Interest RatesThe Term Structure of Interest Rates– Unfortunately, the model miserably fails a

variety of empirical testsvariety of empirical tests– the absence of a usable empirical model of

the term structurethe term structure • severely handicaps the conduct of monetary

policy– which works its will on the economy through

short-term rates of interest.

148

Tasa de interés de mercado (actual, 9 años después) vs predicción para dentro de 9 años 1949 1991predicción para dentro de 9 años, 1949-1991

149

• Modeling ExpectationsModeling Expectations– Where expectations can be measured directly,

they do not appear to be "rational“– And at least some empirical relation-ships,

including the term structure, seem to work better with adaptive than with rational expectationswith adaptive than with rational expectations

• En el modelo de mecanismos de transmisión (MMT) del Banco de la República (MMT)

10.65 0.35 0.29( )NT NT et t t t ty yπ π π−= + + −

150

Taylor (1997) cinco principiosTaylor (1997) cinco principios1 En el largo plazo el crecimiento depende de factores de

ofertaofertamovimientos a lo largo y en movimientos de la función de

producción (k/l y productividad)practical? Yespractical? Yes

estimates of potential GDP growth and output gap

Of course there are debates about how to apply this principle:Of course there are debates about how to apply this principle: Are there diminishing returns to information capital? How much would fundamental tax reform raise the capital-labor ratio? How much does a reduction in marginal tax rates increase labor supply?

151

Output Gap in Colombia

Brecha del Producto

Output Gap in Colombia

Brecha del Producto

1%

2%

3%

-1%

0%

1%

-4%

-3%

-2%

-6%

-5%

77 80 83 86 89 92 95 98 01 04 07

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

152

2 No trade off between inflation and output in the long run. ll i h hif b h l b k hi h fa corollary is that a shift by the central bank to a higher rate of money

growth will simply result in more inflation in the long run2 qualifications:

high inflation detrimental to growth; very low rates of inflation as impediments to marketsvery low rates of inflation as impediments to markets

It implies that central banks should pick a long-run target range for inflation and stick with it

153

Crecimiento Anual (%) Real de los M di d P C l biMedios de Pago en Colombia

154

• 3 Short run trade off between inflation3 Short run trade off between inflation and unemployment

Discussion on the channels of money– Discussion on the channels of money expansion

– practical implications for policy:practical implications for policy: • monetary policy should keep the growth of

aggregate demand stable in order to prevent fluctuations in real output and inflation

155

4 Expectations are highly responsive to policy4 Expectations are highly responsive to policyThus, expectations matter for assesing the impact

of monetary and fiscal policypractice? Yes.

For example, macroeconomic models with rational expectations now in use at the Fedexpectations now in use at the Fed

a disinflation will have lower short-run costs if policy is credible

5 Fi l d t li5 Fiscal and monetary policyPolicy rule (one should not think in terms of a none-

time isolated change in the instruments of policy)time isolated change in the instruments of policy)

156

But questions to be debated for many yearsBut questions to be debated for many years– How much optimization is appropriate– the size of elasticities, ,– the role of credit in the monetary transmission

mechanism, – the empirical relevance of "endogenous" growth

models, – whether staggered price-setting models with– whether staggered price-setting models with

rational expectations fit satisfactorily the dynamic correlations that characterize the process of i fl ti i th U it d St tinflation in the United States

157



Keynes, Teoría GeneralR D & C R (2002)Romer, D. & C. Romer, (2002)Conclusiones para nuestra Macro 2 158

• Outstanding faults of economic societyOutstanding faults of economic society– to provide for full employment and its arbitrary

and inequitable distribution of wealth and incomes

• the abstinence of the rich, as is commonly supposed is more likely to be impeded by itsupposed, is more likely to be impeded by it– tasas de interés altas, el ahorro y la función

consumoconsumo– Inducement to invest– Interest today rewards no genuine sacrifice, any

more than does the rent of land159

• It is not the ownership of the instruments of production which it is important for the State to assume. – If the State is able to determine

• the aggregate amount of resources devoted to augmenting the i t tinstruments

• and the basic rate of reward to those who own them, – it will have accomplished all that is necessary.

– Moreover the necessary measures of socialisation can be– Moreover, the necessary measures of socialisation can be introduced gradually and without a break in the general traditions of society

• The central controls necessary to ensure full employment will, y p y ,of course, involve a large extension of the traditional functions of government

• The authoritarian state systems of to-day seem to solve the y yproblem of unemployment at the expense of efficiency and of freedom 160

• the new system might be more favourable to th th ld h bpeace than the old has been

• War has several causesDi t t ff i t ti t l t– Dictators war offers, in expectation at least, a pleasurable excitement

• facilitating their task are the economic causes of war, g ,namely, the pressure of population and the competitive struggle for markets

– Guerras para apropiarse de mercadosp p p– Devaluaciones para exportar el desempleo al vecino

161

• “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is g y g, pcommonly understood.

– Indeed the world is ruled by little else.

• Practical men, who believe themselves to be quite exempt from any i t ll t l i fl ll th l f d f tintellectual influences, are usually the slaves of some defunct economist.

– Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

– I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

– Not, indeed, immediately, but after a certain interval;

• For in the field of economic and political philosophy there are not p p p ymany who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newestbe the newest.

• But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil

162

DesaprendimosDesaprendimos durante los 50s, 60s y 70s?

164


Blinder, Alan S. (1997)Taylor, J., (1997) Blanchard, O., (1997)Solow,R (1997)Solow,R (1997) Eichenbaum, M., (1997)


Algunas conclusiones i 2importante para nuestra macro 2• Los nuevos clásicos tratan de explicar los fenómenos

ó i ( l i l ) i d deconómicos (e.g. el ciclo) asumiendo mercados en competencia perfecta y agentes que maximizan– Sin imperfecciones

• Los keynesianos tienden a pensar en rigideces• Los keynesianos tienden a pensar en rigideces – de precios más que de salarios

• Pero no asumen mercados laborales en equilibrio– Salarios de eficiencia

L l tá i d• Las escuelas están convergiendo: – Metodología de los nuevos clásicos con las intuiciones keynesianas– En particular, “money matters”– Today, many macroeconomists coming from the new classical tradition areToday, many macroeconomists coming from the new classical tradition are

happy to concede to the Keynesian assumption of sticky prices as long as this assumption is imbedded in a suitably rigorous model in which economic actors are rational and forward-looking

166

L i id i l (i t d l d• Las rigideces nominales (impacto de la moneda sobre el producto) se ven “ampliadas” – cuando existen rigideces “reales” (complementareidades)

• E.g. la firma no sube precios cuando crece la demanda– Pro economías de escala o mark-ups contra-ciclicos

• El supuesto de expectativas racionales es centralPero con ello no se eliminan algunas conclusiones keynesianas– Pero con ello no se eliminan algunas conclusiones keynesianas

• Fisher y Taylor: salarios• Dornbusch: tasa de cambio

• Un tratamiento más formal de las imperfeccionesp– Grandes imperfecciones en los mercados de crédito

• Información asimétrica

167

• Varios de los conceptos “keynesianos”Varios de los conceptos keynesianos siguen siendo válidos:

IS (canales?)– IS (canales?)– Curva de Phillips

Ley de Okun– Ley de Okun• Otros conceptos presentan problemas

– La LM– La curva de rendimientos (tasas de interés

l ti )en el tiempo)168

Keynes

-Muchas de sus intuiciones siguen siendointuiciones siguen siendo válidas

-La función consumo-Poco se eleva el ahorro cuando seahorro cuando se suben las tasas de interès (no es adecuado premiar rentistas)-- La importancia del ahorro corriente y el multiplicador

-Rigideces de salarios-Y de precios?

-Las imperfecciones del sistema financiero

“In the long run we are

Keynes

- In the long run we are all dead”

169

Los primeros KeynesianosKeynesianos

-Síntesis Neoclásica-HicksHicks- Samuelson, Modigliani y Tobin

-Curva de Phillips

Modigliani

-Samuelson (con Solow)-Basados en el trabajo pionero de Phillips para Inglaterra en el siglo XIX

-Modelo de Portafolio-Tobin

-Modelos macroeconométricos TobinSolow

-Klein-La depresión de los años 30s fue su motivación fundamental

Klein

170

El ataque a la curva de

Expectativas forward looking

PhillipslookingExpectativas racionales

Friedman

171

ExpectativasExpectativas Racionales

La revolución de las expectativas racionalesexpectativas racionales

Lucas y SargentLa irrelevancia de la política económica

Solo las sorpresas son relevantesAlguna ayuda “empírica” de Barroempírica de Barro

De la cual se retracta posteriormente

También los trabajos de Mishkinj

Expectativas racionales y la función consumo

R,HallHall 172

Keynesianos utilizandoutilizando expectativas racionalesS.Fisher y J.Taylor (y G C l )

racionales

FischerG,.Calvo)

Salarios “staggered” e inercia de precios

R.Dornbuschovershooting

en la tasa de cambio nominal

Taylor

173

Overshooting cambiarioP

* ,P

ε

la tasa de cambio nominal se mueve mucho más que los precios, con lo que la tasa de cambio real fluctúa muchoUna de los mejores argumentos de quienes afirman

174*

**

Si existiera PPP, por el contrario, sería constante

1 (o constanteext

qP PP P qP P

ε ε ε↑= ⇒ ↑= ⇒ = = )

Una de los mejores argumentos de quienes afirmanque existen rigideces de precios en el corto plazo

q: en lugar de ser constante (o 1) se mueve con ε …q g ( )*

*

*

Pq q P PP

ε ε= ⇒ = + −

*solo si , 0 se cumple que qcomo en el el Gráfico

P P ε≈

175

KeynesianosKeynesianos y Rigideces

Costos de Menú, Ak l frigideces

nominales y reales

Akerlof

realesG.AkerlofD RomerD.Romer G,Mankiw, O.Blanchard

176

Ciclos RealesExplicar la realidad macro sin suponermacro sin suponer imperfecciones

El cambio técnico de Solow + agentes maximizadores enmaximizadores en competencia producen el ciclo económico

Prescott

177

InconsistenciaInconsistencia Intertemporal

Kydland y PrescottLa teoría de juegos predice que si lospredice que si los bancos centrales tratan de engañar al púiblico paraal púiblico para expandir la economía

El resultado final

Prescott

esu tado aes más inflación sin beneficio alguno en producciónproducción

178

Imperfecciones en los Mercados de Crédito y su Impacto MacroeconómicoImpacto Macroeconómico

El mercado de “limones”La política monetaria y el canal del crédito

Akerlof

179

Temas comunesTemas comunes• New KeynesiansNew Keynesians• New Classicals

R l i iditi d• Real rigidities and money– Blanchard

• Wage vs price rigidities– Blanchard– Mankiw

180

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