why has u s inflation become harder to forecast we examine whether the u s rate of price inflation has become harder to forecast and to the extent that it has what changes in the inflation process have made it so the main finding is that the univariate inflation process is well described by an unobserved component trend cycle model with stochastic volatility or equivalently an integrated moving average process with time varying parameters this model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well

international competition income distribution and economic growth this paper shows that the neo keynesian case for wage led growth does not generally hold in an open economy model wage increases cause a loss of competitiveness that reduces the trade balance if the economy is relatively open to trade and price elasticities satisfy certain restrictions the worsening of the trade balance more than outweighs the increase in workers consumption thus reducing the growth rate the main theoretical innovation is a flexible markup pricing rule that allows changes in unit labor costs and exchange rates to affect profit margins implications for international relations and class conflict are discussed copyright 1989 by oxford university press

equilibrium indeterminacy and asset price fluctuation in japan a bayesian investigation this paper investigates sources of asset price fluctuation in japan using an estimated financial accelerator model for explicit treatment of expectational beliefs characterized by sunspots the model is analyzed over the parameter space where the equilibrium can be indeterminate we show that indeterminacy arises if the financial accelerator effect is sufficiently large according to our bayesian estimation results japan s economy was affected by sunspot shocks however the contribution of the sunspots to asset price volatility was low rather net worth and cost shocks drove the asset price fluctuation we find however that the sunspots substantially affected capital investment

married womens tastes and the decision to participate in the labour market results from a fixed effects model in the paper we report estimates from two logit models of women s labour force participation a model with out fixed effects estimated from cross sectional data indicates a significant postive relation between work experience and particiption we ask whether the relation is due to a causal influence extered by the former variable on the latter or to a common underlying variable taste for market attachement to answer this question we present results from a fixed effects model estimated from panel data in this model the estimated coefficients of experience are insignificant suggestion that a taste for market attachement underlies both experience and participation is the presence of preschool children

testing for indeterminacy an application to u s monetary policy reply this paper considers a prototypical new keynesian model in which the equilibrium is undetermined if monetary policy is passive the likelihood based estimation of dynamic equilibrium models is extended to allow for indeterminacies and sunspot fluctuations we construct posterior weights for the determinacy and indeterminacy region of the parameter space and estimates for the propagation of fundamental and sunspot shocks according to the estimated model u s monetary policy post 1982 is consistent with determinacy whereas the pre volcker policy is not we find that before 1979 indeterminacy substantially altered the propagation of shocks

why does the yield curve predict output and inflation the slope of the yield curve has been shown empirically to be a significant predictor of inflation and real economic activity but there is no standard theory as to why the relationship exists this article constructs an analytical rational expectations model to investigate the reasons for the empirical results the model suggests that the relationships are not structural but are instead influenced by the monetary policy regime however the yield curve should have predictive power for output and inflation in most circumstances various implications of the theoretical model are tested and confirmed empirically

has the economy become more predictable changes in greenbook forecast accuracy several researchers have recently documented large reductions in economic volatility but a more important question may be whether the economy has become more predictable using forecasts from the federal reserve greenbooks i find that inflation and output have become more predictable though the results for output are somewhat mixed the reductions in unpredictability if any are significantly smaller than reductions in volatility associated with this the predictable component of fluctuations in output and inflation has virtually disappeared

the central bank as shaper and observer of events the case of the yield spread the yield spread has commonly been employed as a successful predictor of economic growth and recessions although its marginal predictive power has decreased since the 1990s notably the yield spread s declining power to predict us economic activity coincided with its growing power to predict us interest rate changes in my view these phenomena are inevitably linked and share one cause the central bank intended to enhance both its transparency and credibility through greater information disclosure this disclosure improved interest rate predictability but might also have crowded out useful private information formerly in the yield spread that helped predict economic activity

part time work and returning to work after the birth of the first child 1990 part time work and returning to work after the birth of the first child applied economics vol 22 no 9 pp 1137 1148

stagnation income distribution and monopoly power the deceleration in the rate of industrial growth in the indian economy since the middlesixties initially interpreted by some as a temporary downward deviation from trend hasnow come to be generally accepted as reflecting long run tendencies towards stagnation several explanations for these tendencies have been offered bhagwati and desai 1970 and bhagwati and srinivasan 1975 have focused on inefficiencies and the misallocationof resources arising from industrial policies pursued by the government others chakravarty 1974 raj 1976 and vaidyanathan 1974 among them have emphasisedthe sluggishness of agricultural growth which is alleged to have retarded industrial growthby limiting markets and the supply of wage goods and raw materials a third view reflectedin srinivasan and narayana 1977 for example has put the blame on a slackening of invest ment demand due to lower public investment but does not explain why public investmentfell or why its fall restrained industrial growth finally there is the explanation put forthin bagchi 1970 1975 1982 in nayyar 1978 and in parts of mitra 1977 that inequali ties in income distribution have resulted in a limited demand for industrial goods reducedincentives for investment and therefore reduced growth this view seems to suggest apositive relation between growth and income equality which is opposed to the generallyaccepted idea derived from cambridge growth models that higher growth requires greaterinequality the purpose of this paper is to examine the last explanation by considering the inter action between growth and income distribution in an underdeveloped economy with thehelp of a simple macroeconomic model the model is a stylisation of the indian economy so that we will be able to use the model to assess the argument that a deceleration in therate of growth of the indian industrial economy could have been caused by an unequaldistribution of income the argument will not be made that this income distributional con straint is the binding constraint on industrial growth the model will merely examine theinternal consistency of the argument that a bad income distribution could explain stagnation in the sense of reduced growth and show that in the indian context as in other similarcontexts this argument can be put forward in explaining stagnation our argument is first presented with a highly simplified schematisation of the indianeconomy which we shall call the basic model the economy modelled produces only one

var analysis and the great moderation post world war ii us macroeconomic history is usually divided into two distinct subperiods the former period which extends up to the end of the volcker disinflation is characterized by a significant extent of macroeconomic turbulence with highly volatile inflation and output growth the latter period from the end of the volcker disinflation up to the present day is marked in contrast by significantly smaller volatilities for both inflation and output growth these dramatic changes in the reduced form properties of the us economy over the last several decades char acterize a phenomenon known as the great moderation see in particular chang jin kim and charles nelson 1999 margaret mcconnell and gabriel perez quiros 2000 a vast empirical literature has investigated the source s of the great moderation in an attempt to disentangle the relative contributions of two main explanations good policy and good luck based on time varying or markov switching structural var methods the good luck hypoth esis has been advocated by a number of authors including james h stock and mark w watson 2003 giorgio e primiceri 2005 christopher sims and tao zha 2006 and luca gambetti evi pappa and fabio canova 2008

the influence of wages and house prices on british interregional migration decisions this paper considers the paradox of a consistent net outflow of people from areas of high job creation and wages over the past 20 years and suggests the explanation that different individuals have different motivations for moving the labour force survey indicates that workers moving for job reasons have migrated to areas of low unemployment and high nominal wages however the inflow into such areas has been more than compensated for by an outflow of people moving for non job reasons a logit analysis of destination choice indicates that job movers are attracted to areas with high wages but are not affected by high house prices in such areas in contrast active non job movers are deterred from areas of high house prices regional house price differences do not influence the destination choice of homemakers or the terminally sick but they do influence the destination choice of retirees all groups prefer to travel the least distance when moving

the endogeneity of the natural rate of growth the aim of this paper is to estimate the sensitivity of the natural rate of growth to the actual rate of growth for 15 oecd countries over the period 1961 95 on the hypothesis that the natural rate of growth is not exogenously given to do this we estimate the natural rate of growth and then how it changes when the actual growth rate is different from the natural rate as a side test of the endogeneity hypothesis we also test for the direction of causality between national output and factor inputs for the same set of countries our results support the idea that the natural rate of growth is not independent of the actual rate of growth and bring to the fore the importance of focusing on demand as well as supply for an understanding of long run growthrate differences between countries

part time participation over the life cycle among married women who work in the market reported here are the estimates from two logit models of married women s labour force employment a pooled unconditional logit that does not control for fixed effects and a conditional logit model incorporating fixed effects both sets of results indicate the presence of occupational segregation between part time and full time employment since the amount of part time experience a woman has obtained increases the probability of part time employment these results are in agreement with those reported in previous studies that the presence of preschool children differentially encourages part time employment

functional income distribution and aggregate demand in the euro area an increase in the wage share has contradictory effects on the subaggregates of aggregate demand private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes investment expenditures ought to be negatively affected because investment will positively depend on profits net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labour costs and thus a loss in competitiveness therefore theoretically aggregate demand can be either wage led or profit led depending on how these effects add up the results will crucially depend on how open the economy is internationally the paper estimates a post kaleckian macro model incorporating these effects for the euro area and finds that the euro area is presently in a wage led demand regime implications for wage policies are discussed

sunspot fluctuations ulnder zero nominal interest rates abstract we empirically examine to what extent self fulfilling expectations i e sunspots affected macroeconomic fluctuations in japan under the zero interest rate policy according to our bayesian estimation results sunspots had substantial effects on both output and inflation

distribution and growth reconsidered empirical results for six oecd countries we analyse the relationship between functional income distribution and economic growth in austria france germany the netherlands the uk and the usa from 1960 until 2005 the analysis is based on a demand driven distribution and growth model for an open economy inspired by bhaduri and marglin which allows for either profit or wage led growth we find that growth in france germany the uk and the usa has been wage led whereas austria and the netherlands have been profit led in the case of austria a domestically wage led economy changes to profit led when including the effect of distribution on external trade the netherlands however are already profit led without external trade our results so far only partially confirm bhaduri and marglin s theoretical conclusion that wage led growth becomes less feasible when the effects of distribution on foreign trade are taken into account

indeterminacy and forecastability recent studies document the deteriorating performance of forecasting models during the great moderation this conversely implies that forecastability is higher in the preceding era when the economy was unexpectedly volatile we offer an explanation for this phenomenon in the context of equilibrium indeterminacy in dynamic stochastic general equilibrium models first we analytically show that a model under indeterminacy exhibits richer dynamics that can improve forecastability then using a prototypical new keynesian model we numerically demonstrate that indeterminacy due to passive monetary policy can yield superior forecastability as long as the degree of uncertainty about sunspot fluctuations is relatively small

alternative closures again a comment on growth distribution and inflation marglin 1984a b has recently made a most valuable contribution to the study of econ omic growth and income distribution by showing that the neoclassical neo keynesian and neo marxian approaches can be interpreted as providing alternative rules which close an underdetermined system comprising a production equation and a price equation this exercise provides simple models illustrating the essence of each tradition and allows easy comparison to be made between them however a problem with the exercise of which marglin is aware is that those partial to particular traditions may find his reading of the essence of their approach to be inadequate some of those who may loosely be identified as belonging to the neo marxian and neo keynesian tradition in particular will find some central elements of their theories having no place in marglin s models perhaps the most important concerns the possible stimulative effects of greater income equality on growth a higher real wage could increase the level of consumption in the economy increase effective demand induce firms to invest more and raise the rate of growth of the economy 1 such a story cannot be told by marglin s models in which the relationship between growth measured by the rate of growth of output and income distribution measured by the real wage is inverse criticisms of this type may imply that there may be problems inherent in marglin s comparative method or in the way his exercise is conducted i shall argue that the latter is the case and suggest how it can be rectified without damaging the nature of the exercise the problem lies in marglin s slipping in without acknowledgement strong econ omic asumption in his underdetermined model which supposedly has minimal economic

bargaining power effective demand and technical progress a kaleckian model of growth following the kaleckian tradition this paper presents a demand led growth model in which the distribution of income is fully endogenised this is done by introducing claims on income by workers and firms the bargaining power of these two groups affects through distribution the patterns of accumulation and inflation in turn the bargaining power of workers is affected by the rate of change of employment the paper discusses the model s static and dynamic implications including the effects of exogenous and induced technical progress the model confirms all the typical kaleckian results including the fact that increases in real wages may lead to accelerating accumulation as well as inflation it also produces a new result it is possible that an increase in the rate of change of labour productivity may not lead to an increase in the rate of change of employment

accumulation innovation and catching up an extended cumulative growth model this paper presents an extended model of cumulative growth in which the effects of innovation and catching up are considered innovation adds another source of cumulative growth to that of traditional models and allows a consideration of the importance of non price determinants of international competitiveness catching up is the major force leading to convergence in productivity owing to the effect of the diffusion of technology the model allows one to analyse whether cumulative forces may lead to stable growth and whether this solution generates convergence in productivity levels the structural model is tested for a set of oecd countries over the period 1965 94

distribution aggregate demand and productivity growth theory and empirical results for six oecd countries based on a post kaleckian model empirical research based on the bhaduri marglin variant of the kaleckian model has recently shown that aggregate demand in many medium sized and large open economies tends to be wage led in the medium to long run even in a period of increasing globalisation in this paper we extend this type of analysis and integrate the effects on productivity growth theoretically and empirically productivity growth is introduced into the theoretical model making use of the verdoorn effect or of kaldor s technical progress function and hence of a positive relationship between gdp or capital stock growth and productivity growth further on a cost push or marx hicks effect and hence a positive impact of real wage growth or the wage share on productivity growth is taken into account in the empirical part we estimate productivity growth equations for six countries introducing these two effects finally economic policy conclusions are drawn

unemployment and the real wage the economic basis for contesting political ideologies using the keynesian theory of effective demand this paper demonstrates how particular models such as that of cooperative capitalism enunciated by the left keynesian social democrats the marxian model of profit squeeze emphasizing distributive conflict and even the conservative model relying on supply side stimulus fit in as particular variants of a more general theoretical scheme through a reconstruction of the familiar is schedule the argument is weaved around the theme of the relations between unemployment and real wage in the context of both a closed and an open economy to explain the common macroeconomic basis of contesting ideologies copyright 1990 by oxford university press

macroeconomic structure endogenous technical change and growth this paper shows the relevance of the macroeconomic structure that governs short term changes in aggregate demand and income distribution in the determination of long term growth rates it develops a new growth model by introducing endogenous technical change into a keynesian marxist synthesis model of accumulation and distribution this model has multiple equilibria a high growth equilibrium that is stable if rising wage share leads to an increase in investment and real wages are somewhat rigid and a low growth equilibrium that is stable under opposite circumstances based on this result the paper discusses how institutions and history matter in long term growth copyright 1994 by oxford university press

endogenous economic growth a new approach this new approach incorporates on the demand side the problem of effective demand and unemployment while rejecting on the supply side the oversimplistic use of a production function with or without capital labour substitution the focus on the adoption and diffusion of labour productivity growth permits viewing supply as being driven endogenously by inter class conflict over distribution as well as inter class conflict among rival firms over market shares the result is a race between growth rates in labour productivity and in the real wage rate which drives demand and productivity growth on the one hand while making wage share reasonably constant on the other the existence and stability properties of the steady state are also examined copyright 2006 oxford university press

downward occupational mobility and part time women workers 1988 downward occupational mobility and part time women workers applied economics vol 20 no 4 pp 485 495

technology demand and distribution a cumulative growth model with an application to the dutch productivity growth slowdown this paper argues that the case for real wage growth restraint and the consequent restoration of profitability which the mainstream consensus regards as a necessary condition for sustained output and productivity growth is based on weak foundations because it neglects the negative impact of wage moderation on productivity growth using a general keynesian growth model which integrates a wage led or profit led demand regime and a productivity regime incorporating the productivity growth enhancing effects of higher demand and higher real wages the conditions are identified under which real wage restraint fails to raise output and productivity growth the model is applied empirically to the netherlands 1960 2000 copyright 2006 oxford university press