《宏观经济学 Macroeconomics》课外读物：The New Keynesian Economics and the Output-Inflation Trade-Off.pdf_大学文库

explained-assumed directly, as in disequilibrium models, orintroduced through theoretically arbitrary assumptions about labor contracts Indeed it was clearly in the interests of agents to eliminate the rigidities they were assumed to create. If wages, for example, were set above market-clearing level, firms could increase profits by reducing wages Microeconomics teaches us to reject models in which, as Robert lucas puts it, " there are $500 bills on the sidewalk. Thus the 1970s and early 1980s saw many economists turn away from Keynesian theories and toward new classical models with flexible wages and prices But Keynesian economics has made much progress in the past few ears. Recent research has produced models in which optimizing agents choose to create nominal rigidities. This accomplishment derives largely from a central insight: nominal rigidities, and hence the real effects of nominal demand shocks, can be large even if the frictions preventing full nominal flexibility are slight. Seemingly minor aspects of the economy. such as costs of price adjustment and the asynchronized timing of price changes by different firms, can explain large nonneutralities Theoretical demonstrations that Keynesian models can be reconciled with microeconomics do not constitute proof that Keynesian theories are correct. Indeed a weakness of recent models of nominal rigidities is that they do not appear to have novel empirical implications. As Lawrence Summers argues While words like menu costs and overlapping contracts are often heard little if any empirical work has demonstrated connection between the extent of these phenomena and the pattern of cyclical fluctuations. It is difficult to think of any anomalies that Keynesian research in the nominal rigidities"'tradition has resolved, or of any new phenomena that it has rendered comprehensible. 3 The purpose of this paper is to provide evidence supporting Keynesian theories. We point out a simple prediction of Keyne odels General Disequilibrium Model of Income and Employment, American Economic Review, 1), pp, 82-93; and E. Malinvaud, The Theory of Term Contracts, Rational Expectations and the Optimal Money Supply Rule, Journal of Political Economy, vol. 85(February 1977), pp. 191-205; and Jo Anna Gray,On indexation and Contract Length, Journal of Political Economy, vol 86( February 1978) pp.1-18 eh hould Keynesian econ Curve? ""in Rod Cross, ed. Unemployment, Hysteresis, and the Natural Rate Hypothesis (Basil Blackwell, 1988), p. 12

Laurence Ball, N. Gregory Mankiw, and David Romer models that contradicts other leading macroeconomic theories and show that it holds in actual economies. In doing so, we point out a"new phenomenon"that Keynesian theories " render comprehensible The prediction that we test concerns the effects of steady inflation In Keynesian models, nominal shocks have real effects because nominal prices change infrequently. An increase in the average rate of inflation firms to adjust prices more frequently to keep up with the rising price level. In turn, more frequent price changes imply that prices adjust more quickly to nominal shocks and thus that the shocks have smaller real effects. We test this prediction by examining the relation between average inflation and the size of the real effects of nominal shocks both across countries and over time. We measure the effects of nominal shocks by the slope of the short-run Phillips curve Other prominent macroeconomic theories do not predict that average inflation affects the slope of the Phillips curve. In particular, ourempirical work provides a sharp test between the Keynesian explanation for the Phillips curve and the leading new classical alternative, the Lucas imperfect information model. 4 Indeed, one goal of this paper is to redo Lucas's famous analysis and dramatically reinterpret his results. Lucas and later authors show that countries with highly variable aggregate demand have steep Phillips curves. That is, nominal shocks in these countries have little effect on output. Lucas interprets this finding as evidence that highly variable demand reduces the perceived relative price changes resulting from nominal shocks. We provide a Keynes interpretation of Lucas' s result: more variable demand, like high average infation, leads to more frequent price adjustment. We then test the differing implications of the two theories for the effects of average infation. Our results are consistent with the Keynesian explanation for the Phillips curve and inconsistent with the classical explanation In addition to providing evidence about macroeconomic theories, our finding that average inflation affects the short-run output-inflation trade- off is important for policy. For example, it is likely that the trade-off facing policymakers in the United States has changed as a consequence of disinflation in the 1980s. Our estimates imply that a reduction in 4. Robert E. Lucas, Jr, "Expectations and the Neutrality of Money, Journal of Economic Theory, vol 4(April 1972),pp. 103-24; Lucas, ""Some International Evidence on Output-Inflation Tradeoffs, American Economic Review, vol. 63(June 1973), pp 326-34

Brookings Papers on Economic Activity, 1: 988 average infation from 10 percent to 5 percent substantially alters the short run impact of aggregate demand The body of the paper consists of three major sections. The first discusses the new research that provides microeconomic foundations for Keynesian theories. The second presents a model of price adjustment It demonstrates the connection between average inflation and the slope of the Phillips curve and contrasts this result with the predictions of other theories. The third section provides both cross-country and time series evidence that supports the predictions of the model New Keynesian Theories According to Keynesian economics, fluctuations in employment and output arise largely from fluctuations in nominal aggregate demand. The reason that nominal shocks matter is that nominal wages and prices are not fully flexible. These views are the basis for conventional accounts of macroeconomic events For example, the consensus explanation for the 1982 recession is slow growth in nominal demand resulting from tight monetary policy. The research program described here is modest in the sense that it seeks to strengthen the foundations of this conventional thinking, not to provide a new theory of fluctuations, In particular, its goal is to answer the theoretical question of how nominal rigidities arise from optimizing behavior, since the absence of an answer in the 1970s was largely responsible for the decline of Keynesian economics In the following discussion we first describe the central point of the recent literature: large nominal rigidities are possible even if the frictions preventing full nominal flexibility are small. We next describe some phenomena that greatly strengthen the basic argument, including rigidi ties in real wages and prices and asynchronized timing of price changes We then discuss two innovations in recent models that are largely responsible for their success: the introduction of imperfect competition and an emphasis on price as well as wage rigidity. Finally, we argue tha the ideas in recent work are indispensable for a plausible Keynesian account of fluctuations. 5 5. Some of the ideas of this literature are discussed informally by earlier Keynesian authors. To cite just two examples, see the discussion of asynchronized timing of price changes in Robert J. Gordon, Output Fluctuations and Gradual Price Adjustment

Laurence Ball, N. Gregory Mankiw, and David Romer 5 SMALL NOMINAL FRICTIONS AND LARGE NOMINAL RIGIDITIES The recent literature on nominal rigidities enters an argument that Keynesians appeared to be losing. Members of the new classical school that developed in the 1970s challenged Keynesians to explain the rigidities in Keynesian models. In response, Keynesians sometimes cited costs of adjusting prices. But as the classicals pointed out, these costs, while surely present, appear small. Indeed, the frequently men- tioned"menu costs-the costs of printing new menus and catalogs, of replacing price tags, and so on-sound trivial. Thus the impediments to nominal flexibility in actual economies appear too small to provide a foundation for Keynesian models A common but mistaken response is that there are many obvious sources of large wage and price rigidities: implicit contracts, customer markets, efficiency wages, insider-outsider relationships, and so on. The problem is that these phenomena imply rigidities in real wages and prices, while the Keynesian theory depends on rigidities in nominal wages and prices. Real rigidities are no impediment to complete flexibility of nominal prices, because full adjustment to a nominal shock does not require any change in real prices. The absence of models of nominal rigidity reflects the microeconomic proposition that agents do not ca about nominal magnitudes. The only apparent departures from this proposition in actual economies are the small costs of nominal adjust ment Thus recent work begins with the premise that it is inexpensive to reduce nominal rigidity and asks how substantial rigidity nonethele arises. The central answer of the literature is presented by mankiw, Akerlof and Yellen, Blanchard and Kiyotaki, and Ball and romer. Journal of Economic Literature, vol. 19(June 1981), pp. 493-530, and the discussion of externalities from nominal rigidity in Charles L. Schultze, Microeconomic Efficiency nd Nominal Wage Stickiness, American Economic Review, vol. 75(March 1985) 6. N. Gregory Mankiw, ""Small Menu Costs and Large Business Cycles: A Macroe of Monopoly, Quarterly Journal of Economics, vol, 100(May 1985), pp A, Akerlof and Janet L, ye ics,vol.100(1985 Supplement), pp. 823-38; Oliv erican Economic Review, vol, 77 (September 1987), pp. 647-66 David Romer, Are Prices Too Sticky? Working Paper 2171(NBER, February 1987)

Brookings Papers on E Activity, 1: 1988 Second-Order Private Costs and First-Order Business Cycles. Mankiw and Akerlof and Yellen make a simple but important point. They study imperfectly competitive economies and show that the cost of nominal dities to price setters can be much smaller than the macroeconomic ffects. An example that illustrates the cost to price setters is a firm that initially sets its price at the profit-maximizing level but does not adjust after the money supply falls. We let m () denote the firms profits as a function of its price and let P be the firms predetermined price and P* its profit-maximizing price, which it would set if it adjusted. Using a Taylor expansion, we can approximate the firms profit loss from not (1)丌(P*)-丌(P)≈丌(P)P*-P)-丌"(P*)(P*-P)2 But since P* maximizes profits, '(*)is zero. Thus the profit loss from nonadjustment is second order-that is, proportional to the square of (P*-P). As long as the predetermined price is close to the profit- maximizing price, the cost of price rigidity to the firm is small But rigidity can have first-order macroeconomic effects. An increase in nominal money with nominal prices fixed leads to a first-order increase in real aggregate demand, and hence in real output. For example, if the aggregate demand curve is simply y= M/P, rigid prices imply a change in output proportional to the change in money The effect on social welfare is also first order, as follows from the assumption of imperfect competition. Under imperfect competition, the profit-maximizing price is socially suboptimal. The price is too high and output is too low. Thus at P* the first derivative of welfare with respect to the firms price is negative: welfare would rise if the price fell below P*. Nonadjustment to a fall in money implies P greater than P*, given the negative first derivative of welfare, the welfare loss is first order. Because the cost of rigidity to a price setter is second order while the macroeconomic effects are first order, the latter can be much large This finding resolves the puzzle of why price setters refuse to incur the mall costs of reducing the business cycle through more flexible prices Despite the large macroeconomic effects, the private itives are Aggregate Demand Externalities. blanchard and Kiyotaki provide an important interpretation of the result in Mankiw and Akerlof-Yellen:

Brookings Papers on Economic Activity, 1: 1988 the recession between reduced sales and a lower price. The recession would end and everyone would be much better off if all firms adjusted But each firm believes that it cannot end the recession and therefore may fail to adjust even if the costs of adjustment are much smaller than the costs of the recession This argument resembles standard microeconomic analyses of exter- nalities. Consider the classic example of pollution. Pollution would be greatly reduced, and social welfare greatly improved, if each person incurred the small cost of walking to the trash can at the end of the block But each individual ignores this when he throws his wrapper on the street because he is only one of many polluters. Because of externalities economists do not find highly inefficient levels of pollution puzzling even though the costs of reducing pollution are small. For similar reasons highly inefficient nominal rigidities are not a mystery even though menu costs are sma Externalities from Fluctuations in Demand. Keynesians believe not only that shocks to nominal aggregate demand cause large fluctuations in output and welfare, but also that these fluctuations are inefficient, and thus that stabilization of demand is desirable. The models surveyed so far do not provide a foundation for this view. As explained above, nonadjustment of prices to a fall in demand leads to large reductions output and welfare. But nonadjustment to a rise in demand leads to higher output and, because output is initially too low under imperfect competition, to higher welfare. Thus the implications of fluctuations for average welfare, and hence the desirability of reducing fluctuations, are unclear. Indeed. Ball and romer show that the first-order welfare effects of fluctuations average to zero, which means that the first order-second order distinction is irrelevant to this issue. 8 Nonetheless, Ball and Romer show, by comparing the average social and private costs of nominal rigidity, that small nominal frictions are sufficient for large reductions in average welfare. The private cost is fluctuations of a firms relative price around the profit-maximizing level The social cost is the private cost plus the cost of fluctuations in real aggregate demand Greater flexibility would stabilize real demand, but each firm ignores its effect on the variance of demand, just as it ignores its effect on the level of demand after a given shock. Although both the 8. Ball and Romer, ""Are Prices Too Sticky?

Laurence ball, N. Gregory Mankin, and David Romer average social and average private costs are second order, Ball and Romer show that the former may be much larger: fluctuationsin aggregate demand can be much more costly than fluctuations in relative prices. As a result, small frictions can prevent firms from adopting greater flexibility even if business cycles are highly inefficient STILL LARGER RIGIDITIES The papers discussed so far establish that nominal rigidities can b far larger than the frictions that cause them. But as we now describe, the simple models in these papers cannot fully explain nonneutralities of the size and persistence observed in actual economies. Therefore, we turn to more complicated models that incorporate realistic phenomena that magnify nominal rigidities, These phenomena include rigidities in real wages and prices and asynchronized timing of price changes by different firms Real rigidities. As we argue above, real rigidities alone are no impediment to full nominal flexibility. But Ball and Romer show that a high degree of real rigidity, defined as small responses of real wages and real prices to changes in real demand, greatly increases the nonneutral- ities arising from small nominal frictions. g This finding is important because, although models with nominal frictions but no real rigidities can in principle produce large nominal rigidities, they do so only for implausible parameter values. Most mportant, large rigidities arise only if labor supply is highly elastic, while labor supply elasticities in actual economies appear small. The role of labor supply is illustrated by a hypothetical economy with imperfect competition and menu costs in the goods market but a Walrasian labor market. If menu costs led to nominal price then nominal shocks would cause large shifts in labor demand supply were inelastic, these shifts in labor demand would changes in the real wage and thereby create large incentives for price setters to adjust their prices. As a result, nominal rigidity would not be an equilibrium While for plausible parameter values nominal frictions alone produce little nominal rigidity, Ball and Romer show that considerable rigidity 9. Laurence Ball and David Romer, " "Real Rigidities and the Non-Neutrality of Money, " Working Paper 2476(NBER, December 1987)