Macroeconomic Policy and Public Choice

ISBN-13: 9783540648727 / Angielski / Miękka / 1998 / 275 str.

David Kiefer

Opis

Subject of this book is the intersection between political science and macroeconomics. The central idea is the existence of a political economic equilibrium in which the government acts to dampen the business cycle. The election cycle implies that this equilibrium may be a cycle rather than a point. An extension of new Keynesian theory provides a model of endogenous stabilization in which the government practices short-run stabilization policy which dampens the impact of exogenous shocks. This is a situation in which rational voters favor discretionary policy over a fixed policy rule even with rational economic agents. Special attention is given to the relevant data and to the possibilities of hypothesis testing.

Spis treści

A Historical Introduction: The Keynesian revolution and the evolution of government`s role.- Keynesian orthodoxy.- The political consequences of depression proofing.- The economic consequences of depression proofing.- Schools of thought.- Ideology and politics.- The market failure rationale for government intervention.- Public choice.- Conclusion.- Microeconomic Foundations: Introduction.- Consumers.- Producers.- General equilibrium.- Pareto efficiency.- Social welfare functions.- Unemployment and inflation.- The government budget and economic policy.- Conclusion.- Social Choice: Introduction.- The theoretical superiority of majority rule.- The impossibility of asking for move.- Median voter model.- Two-dimensional social choice.- Probabilistic voting.- Political information and party ideology.- Conclusion.- Short-Run Macro Models: Introduction.- Classical macro from microfoundations.- Rationed equilibrium and rigid prices.- Non-Walrasian equilibria.- A Cobb-Douglas example.- Unemployment equilibrium with imperfect competition.- Conclusion.- The Phillips Curve and Expectations: Introduction.- The natural rate hypothesis.- Unemployment and output gaps.- Expectations about inflation in the future.- Econometric uncertainty.- One model of supply: producer uncertainty.- Another model: predetermined wages.- New classical macroeconomics.- Conclusion.- Fiscal and Monetary Policy: Introduction.- Accounting peculiarities in the US budget.- Built-in stabilizers.- Balanced and unbalanced budgets.- Doubts about fiscal policy effectiveness.- The Federal Reserve and the president.- Describing the money stock.- Causality tests.- Spurious regression.- Conclusion.- Keynesian Business Cycles: Introduction.- Cycles in a Keynesian model.- A linear econometric model.- Linear versus nonlinear models.- Specification uncertainty.- Dynamic behavior.- Conclusion.- Citizen Preferences for Stabilization: Introduction.- Incumbent performance and voter preferences.- Presidential popularity.- Modeling popularity.- Results.- Conclusion.- Endogenous Stabilization and Macroeconomic Ideology: Introduction.- New Keynesian stabilization analysis.- New classical stabilization analysis.- Ideology.- Perceptions and expected utility.- Plausible parameter values.- The zero-inflation rule and inflation rule and inflation volatility.- Voters should prefer conservatives, under certain conditions.- Uncertainty about candidate platforms.- Conclusion.- Appendix.- Theories of the Political Business Cycle: Introduction.- Election opportunism.- Partisan macroeconomics.- Forward-looking expectations.- Backward-looking expectations.- Growth rate targets.- Generalizations.- Conclusion.- Evidence of Political Business Cycles: US observations remain unexplainted.- Econometric specification.- Regression results.- Observations from 18 OECD democracies.- Regression tests for the OECD.- Alternative OECD results.- Conclusion.- Government Debt, Deficit and Social Security: Public debt in the short- and long-run.- Overlapping generations and efficiency.- Public debt.- Pay-as-you-go social security.- Overlapping generations and equity.- Market imperfections in the credit market.- The Ricardian equivalence theorem.- Rationality, taboo or inertia.- Economic growth and the bequest constraint.- Social security.- Conclusion.- Appendix: More overlapping scenarios.- Conclusion: The Keynesian revolution.- Foundations.- Weak evidence of policy effectiveness.- Rational expectations and the Phillips curve.- An inherently unstable equilibrium.- Stabilization and conservatism.- Doubts about rational expectations.- Long-run Keynesian outcomes.