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Remaining Puzzles And Neglected Issues In Macroeconomics




This paper analyzes the "chain" of transmission mechanisms of economic policy actions to financial markets, output and employment, and, finally, unemployment--in an attempt to identify "remaining puzzles" and "neglected issues" in macroeconomics. The paper emphasizes the consequences of fiscal and monetary policy actions on real variables, including real interest rates and real exchange rates. An attempt is made to explain why product demand shocks often tend to have faster effects on output and employment than on prices. The paper also discusses why demand-induced increases in output and unemployment are not systematically connected with a reduction in the product wage rate. The paper ends with a discussion of various supply-side considerations in macroeconomics. Copyright 1989 by The editors of the Scandinavian Journal of Economics.
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Suggested Citation

  • Lindbeck, A., 1988. "Remaining Puzzles And Neglected Issues In Macroeconomics," Papers 424, Stockholm - International Economic Studies.
  • Handle: RePEc:fth:stocin:424

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    References listed on IDEAS

    1. Stulz, René M., 1984. "Optimal Hedging Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 19(02), pages 127-140, June.
    2. Fischer, Stanley, 1975. "The Demand for Index Bonds," Journal of Political Economy, University of Chicago Press, vol. 83(3), pages 509-534, June.
    3. Richard, Scott F., 1975. "Optimal consumption, portfolio and life insurance rules for an uncertain lived individual in a continuous time model," Journal of Financial Economics, Elsevier, vol. 2(2), pages 187-203, June.
    4. Mayers, David, 1973. "Nonmarketable Assets and the Determination of Capital Asset Prices in the Absence of a Riskless Asset," The Journal of Business, University of Chicago Press, vol. 46(2), pages 258-267, April.
    5. Merton, Robert C., 1971. "Optimum consumption and portfolio rules in a continuous-time model," Journal of Economic Theory, Elsevier, vol. 3(4), pages 373-413, December.
    6. Duffie, Darrell & Jackson, Matthew O., 1990. "Optimal hedging and equilibrium in a dynamic futures market," Journal of Economic Dynamics and Control, Elsevier, vol. 14(1), pages 21-33, February.
    7. Bernard Dumas, "undated". "Pricing Physical Assets Internationally," Rodney L. White Center for Financial Research Working Papers 12-88, Wharton School Rodney L. White Center for Financial Research.
    8. Cox, John C & Ingersoll, Jonathan E, Jr & Ross, Stephen A, 1985. "An Intertemporal General Equilibrium Model of Asset Prices," Econometrica, Econometric Society, vol. 53(2), pages 363-384, March.
    9. Breeden, Douglas T., 1979. "An intertemporal asset pricing model with stochastic consumption and investment opportunities," Journal of Financial Economics, Elsevier, vol. 7(3), pages 265-296, September.
    10. S. Fischer, 1974. "The Demand for Index Bonds," Working papers 132, Massachusetts Institute of Technology (MIT), Department of Economics.
    11. Adler, Michael & Detemple, Jerome B, 1988. " On the Optimal Hedge of a Nontraded Cash Position," Journal of Finance, American Finance Association, vol. 43(1), pages 143-153, March.
    12. Bernard Dumas, 1988. "Pricing Physical Assets Internationally," NBER Working Papers 2569, National Bureau of Economic Research, Inc.
    13. Merton, Robert C, 1969. "Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 247-257, August.
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    Cited by:

    1. Robert L. Hetzel, 1990. "Maintaining price stability: a proposal," Economic Review, Federal Reserve Bank of Richmond, issue Mar, pages 53-55.


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