Using the savers-spenders theory developed by Mankiw (2000, AER), we propose microfoundations to the existence of rentiers in macroeconomic growth models. From an OLG model which acknowledges the great heterogeneity of consumer behavior apparent in the data, we capture the dynamic considerations of potential rentiers as a natural consequence of intertemporal utility maximization and we analyze ...

This paper presents a dynamic optimization model of RBC type augmented by wage stickiness, and nonclearing labor market. Agents are required to adaptively optimize when facing constraints on the markets. Calibration for the U. S. economy shows that the model will produce higher volatility in employment. Moreover, it provides more reasonable cross-correlation of employment and wages with other m...

In this paper, we investigate the impact of government’s stabilization policy on the dynamic behavior of the economic system in an analytical framework of a Keynes-Goodwin model of the growth cycle. In particular, we study the effects of the policy lag on macroeconomic stability analytically and numerically. It is shown that the increase of the policy lag contributes to destabilize the system, ...

The new learning dynamic of Brown, von Neuman and Nash (1950) is introduced to macroeconomic dynamics via the cobweb model with rational and naive forecasting strategies. This dynamic has appealing properties such as positive correlation and inventiveness. There is persistent heterogeneity in the forecasts and chaotic behavior with bifurcations between periodic orbits and strange attractors for...

Following through on pledges made during his election campaign, President Bush proposed and Congress passed a substantial tax cut in 2001, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). Much has been written about the size of the tax cut, its impact on the federal budget, its distributional consequences, and its short-run macroeconomic impact. There has been less focus on EGTRR...

The state of macroeconomic modeling and the use of macroeconomic models in policy analysis has come under heavy criticism. Critics have accused macroeconomists in academia and policy institutions of relying too much on a particular class of macroeconomic models. This paper proposes a comparative approach to macroeconomic policy analysis that is open to competing modeling paradigms. It reviews r...

In this paper we investigate whether the dynamic properties of the U.S. business cycle have changed in the last fifty years. For this purpose we develop a flexible business cycle indicator that is constructed from a moderate set of macroeconomic time series. The coincident economic indicator is based on a multivariate trend-cycle decomposition model that accounts for time variation in macroecon...

The aim of this article is to analyze the potential for synergies between climate policies and development in a case study on India focusing on the power sector suboptimalities. To do so, we use IMACLIM-R, a dynamic recursive energy-economy model that represents a second best world with market imperfections and short-run adjustments constraints along a long-term growth path. The analysis sugges...

This paper examines the macroeconomic and structural constraints to scaling up aid fl ows to developing countries to meet the Millennium Development Goals in 2015, including infrastructure, competitiveness and the real exchange rate, labour markets, fi scal constraints, governance, and aid volatility and fragmentation. The impact of these constraints on cost-effi cient sequencing and compositio...

Real Expectations: Replacing Rational Expectations with Survey Expectations in Dynamic Macro Models Jeff Fuhrer Abstract: This paper examines the implications of changing the expectations assumption that is embedded in nearly all current macroeconomic models. The paper substitutes measured or “real” expectations for rational expectations in an array of standard macroeconomic relationships, as w...