Stabilization Policy: A Reconsideration
AbstractShould stabilization policy be a macroeconomic priority? Most central banks consider it a goal, but Robert Lucas has contended that policies to stabilize output, even if effective, yield negligible welfare gains. This article critiques Lucas's argument. Existing literature suggests nontrivial benefits from stabilization due to nonlinearity of the social welfare function and of the short-run Phillips curve. Our analysis and examination of the evidence from periods of prolonged high unemployment also suggest further significant gains to stabilization since the "accelerationist" hypothesis does not seem to hold in times of very low inflation. (JEL E61, E63) Copyright 2006, Oxford University Press.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 44 (2006)
Issue (Month): 1 (January)
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Find related papers by JEL classification:
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Vice Chair Janet L. Yellen: Perspectives on Monetary Policy
by Guest Author in The Big Picture on 2012-06-07 11:05:32
- Full text: Janet Yellen â Perspectives on Monetary Policy
by Guest Author in Credit Writedowns on 2012-06-07 13:10:28
- Huang, Ho-Chuan (River) & Fang, WenShwo & Miller, Stephen M., 2014.
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- Ho-Chuan (River) Huang & Stephen M. Miller, . "Does Financial Development Volatility Affect Industrial Growth Volatility?," Working Papers 1302, University of Nevada, Las Vegas , Department of Economics.
- repec:ebl:ecbull:v:30:y:2010:i:1:p:543-557 is not listed on IDEAS
- Gadi Barlevy, 2004. "The Cost of Business Cycles and the Benefits of Stabilization: A Survey," NBER Working Papers 10926, National Bureau of Economic Research, Inc.
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"Does the Dispersion of Unit Labor Cost Dynamics in the EMU Imply Long-run Divergence? Results from a Comparison with the United States of America and Germany,"
Macroeconomics and Finance Series
200702, Hamburg University, Department Wirtschaft und Politik.
- Sebastian Dullien & Ulrich Fritsche, 2007. "Does the Dispersion of Unit Labor Cost Dynamics in the EMU Imply Long-Run Divergence?: Results from a Comparison with the United States of America and Germany," Discussion Papers of DIW Berlin 674, DIW Berlin, German Institute for Economic Research.
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2012-26, University of Connecticut, Department of Economics.
- Ho-Chuan (River) Huang & Stephen M. Miller, 2012. "Banking Market Structure, Liquidity Needs, and Industrial Growth Volatility," Working Papers 1206, University of Nevada, Las Vegas , Department of Economics.
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- Sebastian Dullien & Ulrich Fritsche, 2008. "Does the dispersion of unit labor cost dynamics in the EMU imply long-run divergence?," International Economics and Economic Policy, Springer, vol. 5(3), pages 269-295, November.
- Wang, Peng-fei & Wen, Yi, 2011. "Volatility, growth, and welfare," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1696-1709, October.
- Greg Hannsgen, 2007. "Are the Costs of the Business Cycle 'Trivially Small'?," Economics Working Paper Archive wp_492, Levy Economics Institute, The.
- Janet L. Yellen, 2007. "Implications of behavioral economics for monetary policy," Speech 41, Federal Reserve Bank of San Francisco.
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