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On "Real' and "Sticky-Price' Theories of the Business Cycle

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  • McCallum, Bennett T

Abstract

After presenting some facts about the growth of government in Western industrialized countries, possible causes of this development are analyzed from a public-choice perspective. Next, some empirically tested theories which seek to explain this growth are discussed. Finally, possible consequences for efficiency and individual liberty are examined. It is shown that both the number and size of interest groups (age of democracy) as stated by Mancur Olson (1982) and the increasing share of government expenditure in GDP seem to exert a negative influence on the growth rate of GDP. Copyright 1986 by Ohio State University Press.

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Bibliographic Info

Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 18 (1986)
Issue (Month): 4 (November)
Pages: 397-414

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Handle: RePEc:mcb:jmoncb:v:18:y:1986:i:4:p:397-414

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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References

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  1. Edward C. Prescott, 1986. "Theory ahead of business cycle measurement," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 9-22.
  2. Stulz, Rene M. & Wasserfallen, Walter, 1985. "Macroeconomic time-series, business cycles and macroeconomic policies," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 22(1), pages 9-53, January.
  3. Martin Eichenbaum & Kenneth I. Singleton, 1986. "Do Equilibrium Real Business Cycle Theories Explain Postwar U.S. Business Cycles?," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 91-146 National Bureau of Economic Research, Inc.
  4. Robert B. Litterman & Laurence Weiss, 1983. "Money, Real Interest Rates, and Output: A Reinterpretation of Postwar U.S. Data," NBER Working Papers 1077, National Bureau of Economic Research, Inc.
  5. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
  6. Parkin, Michael, 1977. "Indexing the economy through financial intermediation: a comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 169-171, January.
  7. King, Robert G & Plosser, Charles I, 1984. "Money, Credit, and Prices in a Real Business Cycle," American Economic Review, American Economic Association, vol. 74(3), pages 363-80, June.
  8. Blinder, Alan S. & Fischer, Stanley, 1981. "Inventories, rational expectations, and the business cycle," Journal of Monetary Economics, Elsevier, vol. 8(3), pages 277-304.
  9. Eden, Benjamin, 1983. "Competitive price setting, price flexibility, and linkage to the money supply," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 19(1), pages 253-299, January.
  10. Barro,Robert J. & Grossman,Herschel I., 2008. "Money Employment and Inflation," Cambridge Books, Cambridge University Press, number 9780521068659, October.
  11. repec:nbr:nberre:0126 is not listed on IDEAS
  12. Sims, Christopher A, 1980. "Comparison of Interwar and Postwar Business Cycles: Monetarism Reconsidered," American Economic Review, American Economic Association, vol. 70(2), pages 250-57, May.
  13. White, Lawrence H, 1984. "Competitive Payments Systems and the Unit of Account," American Economic Review, American Economic Association, vol. 74(4), pages 699-712, September.
  14. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
  15. McCallum, Bennett T, 1980. "Rational Expectations and Macroeconomic Stabilization Policy: An Overview," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(4), pages 716-46, November.
  16. Nelson, Charles R., 1985. "Macroeconomic time-series, business cycles, and macroeconomic policies A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 22(1), pages 55-59, January.
  17. Wasserfallen, Walter, 1985. "Forecasting, rational expectations and the phillips-curve: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 15(1), pages 7-27, January.
  18. Fischer, Stanley, 1977. "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 191-205, February.
  19. Blinder, Allan S., 1977. "Indexing the economy through financial intermediation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 69-105, January.
  20. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-89, August.
  21. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
  22. Barro, Robert J., 1976. "Rational expectations and the role of monetary policy," Journal of Monetary Economics, Elsevier, vol. 2(1), pages 1-32, January.
  23. Kydland, Finn E., 1984. "Labor-force heterogeneity and the business cycle," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 21(1), pages 173-208, January.
  24. Akerlof, George A & Yellen, Janet L, 1985. "Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria?," American Economic Review, American Economic Association, vol. 75(4), pages 708-20, September.
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