Using a unique proprietary data set on the behavior of guests visiting theme parks, I document evidence for Giffen behavior in the demand for theme park rides. On average, when the price of a ride increases, that is, the wait time increases, then the probability of riding it increases. This relationship arises predominantly among demand for the least‐desirable rides, it arises predominantly in the theme parks with the fewest number of substitute rides, and it is robust to controlling for expectations of future wait times and other sensitivity analyses. These patterns are all consistent with Giffen behavior.
{"title":"Theme park rides are Giffen goods","authors":"Garth Heutel","doi":"10.1002/soej.12735","DOIUrl":"https://doi.org/10.1002/soej.12735","url":null,"abstract":"Using a unique proprietary data set on the behavior of guests visiting theme parks, I document evidence for Giffen behavior in the demand for theme park rides. On average, when the price of a ride increases, that is, the wait time increases, then the probability of riding it increases. This relationship arises predominantly among demand for the least‐desirable rides, it arises predominantly in the theme parks with the fewest number of substitute rides, and it is robust to controlling for expectations of future wait times and other sensitivity analyses. These patterns are all consistent with Giffen behavior.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"17 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142258674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Arthur H. Goldsmith, Jackson T. Stephens, James F. Casey
A striking feature of the contemporary U.S. economy is the widespread adoption of technologies associated with the 4th Industrial Revolution (IR) including sensors, industrial robotics, artificial intelligence, and machine learning. Empirical work investigating the labor market impacts of 4th IR technological advances reveals they are skill‐biased, primarily advancing job opportunities for those with high levels of formal of education, unlike prior industrial revolutions that were skill neutral. This paper explains how the 4th IR has fostered job polarization, greater technological unemployment, and increasing wage inequality. Moreover, we delineate why these developments are worrisome and likely to expand over time. We assert that policy intervention to promote reinstatement of technologically unemployed persons is warranted, because displacement of labor caused by automation creates negative externalities. Consequently, we provide an example of how tax policies could be used to curtail technological unemployment—without creating hurdles for the adoption of 4th IR innovations. We advance and describe a new, innovative way, for fiscal policy to foster employment opportunities for those at greatest risk of job loss through automation. The initiative entails government subsidies to promote the provision and acquisition of skill certificates that employers view as complementary with 4th Industrial Revolution Technologies.
当代美国经济的一个显著特点是广泛采用与第四次工业革命（IR）相关的技术，包括传感器、工业机器人、人工智能和机器学习。调查第四次工业革命技术进步对劳动力市场影响的实证研究表明，这些技术进步具有技能偏见，主要是为那些受过高等教育的人提供了更多的就业机会，而不像以前的工业革命那样对技能没有影响。本文解释了第四次工业革命如何导致就业两极分化、技术性失业增加和工资不平等加剧。此外，我们还阐述了为什么这些发展令人担忧，并有可能随着时间的推移而扩大。我们认为，有必要采取政策干预措施，促进技术性失业人员重新就业，因为自动化导致的劳动力转移会产生负面的外部效应。因此，我们提供了一个例子，说明如何利用税收政策来减少技术性失业--同时又不给采用第四代 IR 创新技术制造障碍。我们提出并描述了一种新的创新方法，即通过财政政策为那些因自动化而面临最大失业风险的人创造就业机会。这一举措需要政府提供补贴，以促进提供和获取雇主认为与第四次工业革命技术相辅相成的技能证书。
{"title":"The fourth industrial revolution and the future of work: Reasons to worry and policies to consider","authors":"Arthur H. Goldsmith, Jackson T. Stephens, James F. Casey","doi":"10.1002/soej.12714","DOIUrl":"https://doi.org/10.1002/soej.12714","url":null,"abstract":"A striking feature of the contemporary U.S. economy is the widespread adoption of technologies associated with the 4th Industrial Revolution (IR) including sensors, industrial robotics, artificial intelligence, and machine learning. Empirical work investigating the labor market impacts of 4th IR technological advances reveals they are skill‐biased, primarily advancing job opportunities for those with high levels of formal of education, unlike prior industrial revolutions that were skill neutral. This paper explains how the 4th IR has fostered job polarization, greater technological unemployment, and increasing wage inequality. Moreover, we delineate why these developments are worrisome and likely to expand over time. We assert that policy intervention to promote reinstatement of technologically unemployed persons is warranted, because displacement of labor caused by automation creates negative externalities. Consequently, we provide an example of how tax policies could be used to curtail technological unemployment—without creating hurdles for the adoption of 4th IR innovations. We advance and describe a new, innovative way, for fiscal policy to foster employment opportunities for those at greatest risk of job loss through automation. The initiative entails government subsidies to promote the provision and acquisition of skill certificates that employers view as complementary with 4th Industrial Revolution Technologies.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"73 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142189025","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Several scholars report that, due to reverse causality, the endogeneity problem makes it difficult to identify the real effect of institutional factors at the local level, such as corruption, on firm efficiency. This study employs a panel stochastic frontier analysis that endogenizes production efficiency and robustly assesses the effect of corruption at the local level on firms' technical efficiency. We analyze a large panel of Italian firms operating in the building sector from 2013 to 2019 showing that the determinants of local institutional quality affects firms' performance, with the rule of law and control of corruption playing a preeminent role. Controlling for endogeneity, the magnitude of the effects of institutional quality factors at the local level significantly increase. Our findings are robust to alternative IV strategies, alternative specifications of the production function, and the inclusion of other factors that may affect firm efficiency.
一些学者指出，由于存在反向因果关系，内生性问题导致难以确定腐败等地方制度因素对企业效率的实际影响。本研究采用面板随机前沿分析法，将生产效率内生化，并稳健地评估了地方层面的腐败对企业技术效率的影响。我们分析了 2013 年至 2019 年在建筑行业经营的大型意大利企业面板，结果表明地方制度质量的决定因素会影响企业绩效，其中法治和腐败控制发挥着重要作用。在控制内生性的前提下，地方制度质量因素的影响程度显著增加。我们的研究结果对其他 IV 策略、生产函数的其他规格以及纳入可能影响企业效率的其他因素都是稳健的。
{"title":"Exploring the corruption‐inefficiency nexus using an endogenous stochastic frontier analysis","authors":"Massimo Finocchiaro Castro, Calogero Guccio","doi":"10.1002/soej.12734","DOIUrl":"https://doi.org/10.1002/soej.12734","url":null,"abstract":"Several scholars report that, due to reverse causality, the endogeneity problem makes it difficult to identify the real effect of institutional factors at the local level, such as corruption, on firm efficiency. This study employs a panel stochastic frontier analysis that endogenizes production efficiency and robustly assesses the effect of corruption at the local level on firms' technical efficiency. We analyze a large panel of Italian firms operating in the building sector from 2013 to 2019 showing that the determinants of local institutional quality affects firms' performance, with the rule of law and control of corruption playing a preeminent role. Controlling for endogeneity, the magnitude of the effects of institutional quality factors at the local level significantly increase. Our findings are robust to alternative IV strategies, alternative specifications of the production function, and the inclusion of other factors that may affect firm efficiency.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"7 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-09-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142224495","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Following the collapse of Lehman Brothers in September 2008, the Federal Reserve underwent a significant shift in how it implemented monetary policy, transitioning to an excessive‐reserves framework that it had deemed too radical and rejected just months prior. This shift involved borrowing excessive reserves from banks, deviating from its traditional method of borrowing only the amount banks needed to meet reserve requirements and address clearing needs. Despite initial intentions to revert to the necessary‐reserves framework, subsequent developments, including three rounds of quantitative easing, led to the permanent adoption of the excessive‐reserves approach in January 2019 by the Federal Open Market Committee (FOMC). This decision was a mistake. The framework has not yielded the purported benefits, such as simpler policy implementation, and has required the Fed to be vastly larger than originally anticipated. Advocates of the excessive‐reserves approach argue it aligns with the Friedman rule, but alternatives like a voluntary‐reserve‐requirement regime could achieve similar outcomes without the drawbacks.
{"title":"How the Federal Reserve got so huge, and why and how it can shrink","authors":"Bill Nelson","doi":"10.1002/soej.12732","DOIUrl":"https://doi.org/10.1002/soej.12732","url":null,"abstract":"Following the collapse of Lehman Brothers in September 2008, the Federal Reserve underwent a significant shift in how it implemented monetary policy, transitioning to an excessive‐reserves framework that it had deemed too radical and rejected just months prior. This shift involved borrowing excessive reserves from banks, deviating from its traditional method of borrowing only the amount banks needed to meet reserve requirements and address clearing needs. Despite initial intentions to revert to the necessary‐reserves framework, subsequent developments, including three rounds of quantitative easing, led to the permanent adoption of the excessive‐reserves approach in January 2019 by the Federal Open Market Committee (FOMC). This decision was a mistake. The framework has not yielded the purported benefits, such as simpler policy implementation, and has required the Fed to be vastly larger than originally anticipated. Advocates of the excessive‐reserves approach argue it aligns with the Friedman rule, but alternatives like a voluntary‐reserve‐requirement regime could achieve similar outcomes without the drawbacks.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"113 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142224471","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Previous research has shown that inflation contributes to income inequality. However, in recent years, there have also been increasing concerns about the effects of concentration in the banking system on economic activity. Notably, we ask the fundamental questions: “How does the concentration of assets in the banking system contribute to the concentration of income in society? Do the effects of inflation on inequality depend on the degree of banking concentration?” We develop a general equilibrium model with heterogeneous agents and microeconomic foundations for financial intermediaries to study the effects of concentration and monetary policy. The model predicts that concentrated banks contribute to inequality by holding large amounts of liquid assets in order to raise private—but not social—returns from capital investment. As concentrated banks distort the level of investment in the economy, the adverse effects of inflation on inequality are magnified in concentrated banking systems.
{"title":"Income inequality, banking competition, and monetary policy","authors":"Edgar A. Ghossoub, Robert R. Reed","doi":"10.1002/soej.12728","DOIUrl":"https://doi.org/10.1002/soej.12728","url":null,"abstract":"Previous research has shown that inflation contributes to income inequality. However, in recent years, there have also been increasing concerns about the effects of concentration in the banking system on economic activity. Notably, we ask the fundamental questions: “How does the concentration of assets in the banking system contribute to the concentration of income in society? Do the effects of inflation on inequality depend on the degree of banking concentration?” We develop a general equilibrium model with heterogeneous agents and microeconomic foundations for financial intermediaries to study the effects of concentration and monetary policy. The model predicts that concentrated banks contribute to inequality by holding large amounts of liquid assets in order to raise private—but not social—returns from capital investment. As concentrated banks distort the level of investment in the economy, the adverse effects of inflation on inequality are magnified in concentrated banking systems.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"9 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142224469","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the relationship between corruption and income inequality across countries. While previous studies have explored this association at both an international and within‐country level, we expand on this literature in two distinct ways. First, along with the most commonly utilized measure of inequality (Gini coefficients), we also examine income per‐capita at each decile, along with top 1% and 5%, and the associated income shares. Second, we employ an empirical strategy that differs from the existing literature. Our primary results are estimated using matching methods, but we also supplement these results with a “doubly robust” difference‐in‐difference design. We find that a reduction in corruption increases incomes of the top 80% but does not significantly impact incomes of the bottom 20%, or the top 1% and 5%. We find some evidence of income growth amongst the top 1% and 5% following increases in corruption, but these results are inconsistent across estimations. Our results also suggest that accounting for the size of the informal sector matters a great deal in understanding the relationship between corruption and the distribution of income.
{"title":"Good for the goose, bad for the gander? Corruption and income inequality","authors":"Jamie Bologna Pavlik, Justin T. Callais","doi":"10.1002/soej.12733","DOIUrl":"https://doi.org/10.1002/soej.12733","url":null,"abstract":"We examine the relationship between corruption and income inequality across countries. While previous studies have explored this association at both an international and within‐country level, we expand on this literature in two distinct ways. First, along with the most commonly utilized measure of inequality (Gini coefficients), we also examine income per‐capita at each decile, along with top 1% and 5%, and the associated income shares. Second, we employ an empirical strategy that differs from the existing literature. Our primary results are estimated using matching methods, but we also supplement these results with a “doubly robust” difference‐in‐difference design. We find that a reduction in corruption increases incomes of the top 80% but does not significantly impact incomes of the bottom 20%, or the top 1% and 5%. We find some evidence of income growth amongst the top 1% and 5% following increases in corruption, but these results are inconsistent across estimations. Our results also suggest that accounting for the size of the informal sector matters a great deal in understanding the relationship between corruption and the distribution of income.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"14 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142189027","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, I make the case for a nominal GDP level target in the United States. I begin by arguing that the Federal Reserve's current flexible average inflation targeting regime is deficient. I then argue that since a competitive monetary equilibrium is optimal, monetary policy should seek to replicate the competitive monetary model. Doing so resembles nominal GDP targeting. I also offer the following practical reasons why policymakers might prefer a nominal GDP target. Nominal GDP targeting (a) does not require policymakers to determine whether current economic fluctuations are demand‐driven or supply‐driven nor does it require real‐time estimates of the output gap, (b) automatically prevents the central bank from exacerbating supply shocks, and (c) leads to greater financial stability. Finally, I make the case for targeting the level, rather than the growth rate, of nominal GDP. Doing so prevents the path of nominal GDP from deviating arbitrarily far from its intended growth path, which anchors expectations and aids in long‐run economic decision‐making.
在本文中，我提出了在美国设立名义 GDP 水平目标的理由。首先，我认为美联储目前灵活的平均通胀目标制度存在缺陷。然后，我认为既然竞争性货币均衡是最优的，那么货币政策就应该寻求复制竞争性货币模型。这样做类似于名义 GDP 目标制。我还提出了以下实际原因，说明决策者为何倾向于采用名义 GDP 目标。名义 GDP 目标制（a）不需要政策制定者确定当前的经济波动是需求驱动还是供给驱动，也不需要实时估计产出缺口，（b）自动防止中央银行加剧供给冲击，以及（c）带来更大的金融稳定性。最后，我提出了以名义 GDP 水平而非增长率为目标的理由。这样做可以防止名义 GDP 的增长路径任意偏离其预期增长路径，从而锚定预期并有助于长期经济决策。
{"title":"The case for nominal GDP level targeting","authors":"Joshua Hendrickson","doi":"10.1002/soej.12729","DOIUrl":"https://doi.org/10.1002/soej.12729","url":null,"abstract":"In this paper, I make the case for a nominal GDP level target in the United States. I begin by arguing that the Federal Reserve's current flexible average inflation targeting regime is deficient. I then argue that since a competitive monetary equilibrium is optimal, monetary policy should seek to replicate the competitive monetary model. Doing so resembles nominal GDP targeting. I also offer the following practical reasons why policymakers might prefer a nominal GDP target. Nominal GDP targeting (a) does not require policymakers to determine whether current economic fluctuations are demand‐driven or supply‐driven nor does it require real‐time estimates of the output gap, (b) automatically prevents the central bank from exacerbating supply shocks, and (c) leads to greater financial stability. Finally, I make the case for targeting the level, rather than the growth rate, of nominal GDP. Doing so prevents the path of nominal GDP from deviating arbitrarily far from its intended growth path, which anchors expectations and aids in long‐run economic decision‐making.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"7 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142189026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
For much of his career, Milton Friedman advocated a constant monetary growth rule to limit central bank discretion and to achieve long‐term price stability. By contrast, Friedman wrote little on nominal income Members of the public determine what type of money they stabilization as an alternative goal for monetary policy. Nevertheless, a careful examination of Friedman's work shows that in his view the desirability of a constant monetary growth rule depended on its ability to stabilize nominal income. Friedman's preference for simple rules, requiring minimal knowledge on the part of central banks, would have given him strong reason to support nominal income targeting over central banks' standard practice of inflation targeting. Several strategies for achieving a nominal income target are considered, including a modified Taylor rule and several monetary base rules.
{"title":"Milton Friedman and nominal income targeting","authors":"Patrick Horan","doi":"10.1002/soej.12722","DOIUrl":"https://doi.org/10.1002/soej.12722","url":null,"abstract":"For much of his career, Milton Friedman advocated a constant monetary growth rule to limit central bank discretion and to achieve long‐term price stability. By contrast, Friedman wrote little on nominal income Members of the public determine what type of money they stabilization as an alternative goal for monetary policy. Nevertheless, a careful examination of Friedman's work shows that in his view the desirability of a constant monetary growth rule depended on its ability to stabilize nominal income. Friedman's preference for simple rules, requiring minimal knowledge on the part of central banks, would have given him strong reason to support nominal income targeting over central banks' standard practice of inflation targeting. Several strategies for achieving a nominal income target are considered, including a modified Taylor rule and several monetary base rules.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"311 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142224470","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Previous research has highlighted referee bias as a potential contributor to home field advantage in soccer. In order to shed light on the importance of referee bias, we exploit the staggered implementation of Video Assistant Referee (VAR) using data from the top domestic league in 16 countries between 2009 and 2019 to estimate the effect of objective review systems on home field advantage in soccer. Surprisingly, the implementation of VAR had negligible effects on home field advantage and various crucial match statistics despite decreased total offsides and yellow cards. These results provide suggestive evidence regarding the mechanisms through which referee bias might contribute to home field advantage and highlight how scope may limit the effectiveness of review processes in general.
以往的研究强调，裁判偏见是导致足球主场优势的潜在因素。为了揭示裁判偏见的重要性，我们利用 2009 年至 2019 年间 16 个国家国内顶级联赛的数据，利用视频助理裁判（VAR）的交错实施来估计客观审查系统对足球主场优势的影响。令人惊讶的是，尽管越位和黄牌总数有所减少，但 VAR 的实施对主场优势和各种关键比赛统计数据的影响微乎其微。这些结果提供了有关裁判偏见可能导致主场优势的机制的提示性证据，并强调了范围可能如何限制一般审查程序的有效性。
{"title":"Video assistant referee and home field advantage: Implications for referee bias","authors":"Camilo Abbate, Jeffrey Cross, Richard Uhrig","doi":"10.1002/soej.12731","DOIUrl":"https://doi.org/10.1002/soej.12731","url":null,"abstract":"Previous research has highlighted referee bias as a potential contributor to home field advantage in soccer. In order to shed light on the importance of referee bias, we exploit the staggered implementation of Video Assistant Referee (VAR) using data from the top domestic league in 16 countries between 2009 and 2019 to estimate the effect of objective review systems on home field advantage in soccer. Surprisingly, the implementation of VAR had negligible effects on home field advantage and various crucial match statistics despite decreased total offsides and yellow cards. These results provide suggestive evidence regarding the mechanisms through which referee bias might contribute to home field advantage and highlight how scope may limit the effectiveness of review processes in general.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"29 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142189028","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Federal Open Market Committee's 2012 Statement on Longer‐Run Goals and Monetary Policy Strategy interprets the Federal Reserve's dual mandate in light of the natural rate hypothesis and the New Keynesian “divine coincidence.” It sets a quantitative objective for inflation but not unemployment and acknowledges that the goals of price stability and maximum employment are generally complementary. The FOMC began deviating from these principles in December 2012, however, and the Committee's 2020 amended Strategy Statement appears to reflect, instead, the older view that the Phillips curve describes an exploitable trade‐off between inflation and unemployment. To bring its strategy back in line with the lessons of contemporary macroeconomic theory, the FOMC could simply abandon the 2020 amendments and return to its original 2012 framework. Alternatively, the Committee could eliminate the asymmetries and ambiguities that prevent its new strategy from having the desirable properties of a true price level targeting scheme.
{"title":"The devolution of federal reserve monetary policy strategy, 2012–24","authors":"Peter N. Ireland","doi":"10.1002/soej.12730","DOIUrl":"https://doi.org/10.1002/soej.12730","url":null,"abstract":"The Federal Open Market Committee's 2012 Statement on Longer‐Run Goals and Monetary Policy Strategy interprets the Federal Reserve's dual mandate in light of the natural rate hypothesis and the New Keynesian “divine coincidence.” It sets a quantitative objective for inflation but not unemployment and acknowledges that the goals of price stability and maximum employment are generally complementary. The FOMC began deviating from these principles in December 2012, however, and the Committee's 2020 amended Strategy Statement appears to reflect, instead, the older view that the Phillips curve describes an exploitable trade‐off between inflation and unemployment. To bring its strategy back in line with the lessons of contemporary macroeconomic theory, the FOMC could simply abandon the 2020 amendments and return to its original 2012 framework. Alternatively, the Committee could eliminate the asymmetries and ambiguities that prevent its new strategy from having the desirable properties of a true price level targeting scheme.","PeriodicalId":47946,"journal":{"name":"Southern Economic Journal","volume":"36 1","pages":""},"PeriodicalIF":1.9,"publicationDate":"2024-08-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142189029","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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