Business Cycles, Inflation and Welfare

该项目继续开发基于最优化的一般均衡模型，以表征产出和通货膨胀的联合动态。 这项工作涉及对货币政策的实证分析和规范分析。 在以前的NSF资助下，研究人员开发并估计了基于通货膨胀的优化模型。 该项目衡量价格和工资刚性对产出和通货膨胀动态的相对重要性。除了为结构建模提供指导外，该方法还自然地导致了一种方法，以量化产出和通货膨胀可变性的隐含效率成本，这符合最近文献的精神。 该项目为商业周期的来源和成本提供了新的见解，并改进了货币政策和某些财政政策的设计，所采取的方法从货币动态一般均衡经济开始，然后引入某些摩擦。例子包括不完全竞争、名义价格和工资刚性以及各种金融市场摩擦。此外，偏好和技术的假设，提高了框架的能力，占周期性产出和价格行为。一个样本包括：习惯的形成，各种形式的调整成本的投资，和可变因素的利用。现在有一些例子，这些框架已经采取了合理的经验成功的数据。 这个项目探讨了价格和工资刚性的相对重要性，这些刚性是这种方法对产出和通货膨胀动态的基础。除了为后续的结构建模提供指导外，该方法还自然地导致了一种量化产出和通货膨胀可变性的隐含效率成本的方法。 如果价格和/或工资的弹性不足，那么经济周期将产生资源配置效率的波动，反映在家庭消费和休闲的边际替代率与劳动的边际产出之间的差距的波动上。这个缺口，被称为“无效率缺口”，对应于价格加价超过社会边际成本的倒数。此外，可以将这种加价分解为两个部分：价格超过企业边际成本的加价和工资超过家庭边际替代率的加价。 因此，无论是价格还是工资上涨的反周期运动，都会导致效率差距的顺周期运动。 在给定某些参数假设的情况下，有可能构建低效率差距的时间序列度量，并将这一差距分解为价格和工资加价部分。这是有意义的，因为差距度量自然导致波动的效率成本的简单量化指标，并且加价的分解提供了一种方法来度量价格与工资刚性在周期性波动中的相对重要性。

This project continues the development of optimization based general equilibrium models that characterize the joint dynamics of output and inflation. This work involves both a positive and normative analysis of monetary policy. Under a previous NSF grant the investigator developed and estimated optimization based models of inflation. This project measures the relative importance of price and wage rigidities for output and inflation dynamics. In addition to providing guidance for structural modeling, the approach leads naturally to a way to quantify the implied efficiency costs of output and inflation variability, in the spirit of recent literature. The project provides new insights into the sources and the costs of business cycles and improves the design of monetary policy, as well as certain fiscal policies.The approach taken begins with a monetary dynamic general equilibrium economy and then introduces certain frictions. Examples include imperfect competition, nominal price and wage rigidities, as well as various financial market frictions. In addition, preference and technological assumptions are introduced that improve the ability of the framework to account for cyclical output and price behavior. A sample includes: habit formation, various forms of adjustment costs on investment, and variable factor utilization. There are now a number of examples where these frameworks have been taken to the data with reasonable empirical success. This project explores the relative importance of the price and wage rigidities that underlie this approach for both output and inflation dynamics. In addition to providing guidance for subsequent structural modeling, the approach leads naturally to a way to quantify the implied efficiency costs of output and inflation variability. If prices and/or wages are less than fully flexible, then the business cycle will produce fluctuations in the efficiency of resource allocation that are mirrored by fluctuations in the gap between the household's marginal rate of substitution between consumption and leisure and the marginal product of labor. This gap, which is called the "inefficiency gap," corresponds to the inverse of the markup of price over social marginal cost. Further, it is possible to decompose this markup into two components: a markup of price over firms' marginal cost and a markup of the wage over the household's marginal rate of substitution. Countercyclical movements in either the price or wage markup, accordingly, produce procyclical movements in the inefficiency gap. Given certain parametric assumptions, it is possible to construct time series measures of the inefficiency gap and to decompose this gap into its price and wage markup components. This is of interest because the gap measure leads naturally to a simple quantitative indicator of the efficiency costs of fluctuations and the decomposition of the markup provides a way to measure the relative importance of price versus wage rigidity in cyclical fluctuations.