Professional Documents
Culture Documents
INDEX
594 INDEX
Aggregate supply curve, continued Balanced budget multiplier, 233 Banque de France, 302
and policymakers, 181182 Balance of payments Barro, Robert J., 3, 54n, 77n, 8283,
price adjustment mechanism, capital account, 301 164n, 203n, 349353, 352n,
112115 and capital flows, 315 472, 551n
price-output relations along, 112 current account, 300301 Barro-Ricardo equivalence
in short run, 89, 116 definition, 300 proposition, 349352
and supply shocks, 134138 external accounts, 301302 formal demonstration, 352353
wage adjustments, 130 external balance, 315316 theoretical objections to, 352
Aggregate supply shocks, 97 with flexible exchange rates, 322 Barter economy, 394396
transitory or permanent, 137 internal balance, 316 Bartley, Robert, 505
Aiyagari, S. Rao, 542n simple rule for, 300 Base wage, 129130
Akerlof, George A., 128n, 151n, 171, Balance-of-payments crises, 506 Baumol, William, 387n
541n, 564, 566 Balance-of-payments deficits, 302, Baumol-Tobin model, 398399,
Akhtar, M. A., 416n 498, 512 409410
Alesina, Albert, 172n, 173n adjustments under flexible Bayoumi, Tamin, 510n
Altonji, Joseph G., 127n, 352n, 562n exchange rates, 515521 Bean, Charles, 159n
American Economic Association, 18 automatic adjustment, 499 Beer, C., 36n
American Express, 392 automatic adjustment mechanisms, Beggar-thy-neighbor policy,
Anticipated inventory investment, 596 327328, 457
382383 and budget deficit, 501 Bnassy, Jean-Pascal, 544n
Anticipatory monetary policy, 294 central bank role, 502 Bernanke, Ben S., 3, 202n, 275,
Apprenticeship system, in Europe, crawling peg exchange rate, 502 278n, 376n, 427428, 429,
157 devaluation to end, 501502 460n, 461n
Arbitrage, 425 and dollar bubble, 528529 Bernheim, Douglas, 351n
exchange rates and interest rates, exchange rate expectations, Besley, Timothy, 347n
446447 521524 Beveridge, Stephen, 556n
and interest rates, 437 exchange rates and relative price Bhandari, Jagdeep, 505n
and present value, 440 adjustments, 509 Bils, Mark, 4041, 127n
Argentina, 470 financing and adjustment, 498 Birth rates, 85
hyperinflation, 469, 533 with gold standard, 432 Black Monday, 456
monetary policy, 533 interest differentials, 521524 Black Tuesday, 456
official reserves, 533 monetary approach, 512515 Black unemployment, 149, 150
AS; see Aggregate supply monetary approach to, 512515 Blanchard, Olivier, 3, 156n, 158n,
Asian economic crisis, 496, 531 policies to restore balance, 351n, 499n
Asian Tigers, 8788 499502 Blank, Rebecca, 167n
Aspe, Pedro, 504 relative prices and trade balance, Blejer, Mario, 469n, 482n
Asset/liability positions, 166167 509511 Blinder, Alan S., 165, 167n, 190n,
Assets role of prices in open economy, 206n, 471n, 475n
financial, 391392 496498 Blue Chip forecast, 190
liquid, 392 Balance-of-payments equation, 523 Bolivia, hyperinflation, 467, 468469
portfolio, 400 Balance-of-payments surplus, Bond market, linked to stock
Auerbach, A., 228n 301302, 315 market, 445
Austria, hyperinflation, 467n Balance-of-payments target, 513 Bonds
Automatic adjustment, 499 Baldwin, Richard, 511n coupon, 439
suspended by sterilization, 512 Ball, Laurence M., 118n, 146, 401n, face value, 439
Automatic adjustment mechanisms, 473, 564n foreign, 523
496, 501502, 512 Bangladesh, 8384 indexed, 169
gold standard, 432 investment ratio and schooling, 60 maturities, 435
Automatic stabilizers population growth, 89 in open market operations, 270272
definition, 227 Bankers acceptance, 393 prices and yields, 438441
income tax, 186187, 227228 Bank failures, 415, 454455 term premium, 437
multiplier, 187 Bank loans, and money multiplier, Borrowing
unemployment benefits, 187, 228 422 costs of, 420
Autonomous spending Bank of Japan, 303304, 519 versus equities, 369
and aggregate demand, 219 Bank reserves, 416 and nominal interest, 368
and consumption, 219, 221 Bank runs, 415 Boschen, John, 551n
effect of transfer payments, 229 Banks Boskin, Michael J., 36n, 349n
in investment, 246, 246n credit crunch, 429 Bradley, Michael D., 201n
and multiplier, 222225 credit rationing, 376 Brainard, William, 193
and shift in IS curve, 260261 deposit insurance, 415 Brayton, F., 190
fractional reserve system, 413 Brazil, 470
B kinds of monetary holdings, hyperinflation, 469
Baba, Yoshihisa, 394n 392393 Bresnahan, Timothy F., 37, 89n
Bads, 36 NOW accounts, 394 Bretton Woods system, 519,
Bagehot, Walter, 419 reluctance to lend, 274278, 375 524525, 530
Baker, Michael, 152n transmission mechanism, 278 British pound, devaluation, 303
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
INDEX 595
Brown, E. Cary, 233n, 454, 455 internal sources, 373377 to investment, 370373
Brunner, Karl, 453n, 465 share of GDP, 373374 and stock market, 369370
Bruno, Michael, 164n, 171n, 469n, sources of funds, 374375 and taxes, 366367
473 timing of, 373377 in endogenous growth model, 79
Bryant, Ralph C., 527n Business saving, 354 golden-rule, 88
Budget constraint, 217 Business sector, 28n of government, 363
government, 474 investment flows, 362
lifetime, 344 C and marginal product of
Budget deficit, 3234, 230232 Cagan, Philip, 403, 465, 467n capital, 366
Barro-Ricardo equivalence Cairncross, Alec, 458n Card, David, 172n, 562n
proposition, 349353 Calibration techniques, 560 Cardoso, Eliana, 478n
and burden of national debt, Calvo, Guillermo A., 131n Carroll, Christopher, 347348
483484 Campbell, John Y., 346, 349n Carter administration, 288
and external deficit, 501 Canada Case, Anne, 347n
facts and issues, 480487 economic data sources, 46 Case, Karl E., 348n
Fed reaction to, 475, 476 output per worker, 6465 Cash holdings, 395
financing, 421422 real exchange rate, 520 Cecchetti, Stephan G., 130n, 144
in Germany, 294295 stock prices, 441442 Central banks
government outlays, 480481 unit labor costs, 521 ad hoc intervention, 532
and government receipts, 481 working age/retirement age clean floating, 304305
and hyperinflation, 467470 population, 488 credit rationing, 376
inflation-adjusted, 470 Canadian dollar, 446447 financing budget deficits, 422
inflation tax, 474480 Capie, Forrest H., 467n with fixed exchange rates, 302303
measuring Capital with flexible exchange rates,
government assets, 481482 depreciation of, 23, 363 303305, 322, 326
interest payments vs. primary doubling amount of, 7981 foreign exchange intervention,
deficit, 482483 external returns, 81 525526
monetizing, 283284, 474475 and growth, 55 foreign exchange market
money growth and, 474480 investment demand for, 361362 intervention, 303
in recession of 1990 91, 292 long-run level of, 6768 independence of, 205206
Budget surplus, 230231 opportunity cost of, 365 managed float, 304305
definition, 231 private vs. social returns on, 81 money supply control, 255
effects of government purchases, replacement cost, 369370 and perfect capital mobility,
232233 saving and growth in, 6364 317318
effects of taxation, 232233 steady-state values, 63 reserves, 303
full-employment, 233235 stock demand for, 364373 sterilization operations, 512
Buffer-stock saving, 347348 stock market and cost of, 369370 Certainty-equivalence policy, 194
Bundesbank, 293295, 302, 321 Capital account, 314315 Certificates of deposit, 393394
independence of, 206 components, 301 Chain-weighted estimates of real
Bureau of Economic Analysis, 46 definition, 301 GDP, 37n
Burns, Arthur, 206 Capital flows, 315, 365, 522 Chari, V. V., 164n, 203n
Bush, George H. W., 106 and foreign exchange intervention, Chauvet, Marcelle, 438n
Bush, George W., 292293 525 Cheasty, Adrienne, 482n
Bush administration (first), 161n governance, 523 Checkable deposits, 392
Bush administration (second), 185 speculative, 523524 Chen, Daniel, 85n
Business cycles; see also Great Capital gains, 369370 Chinn, Menzie, 201n
depression; Political business Capital-labor ratio, 56, 65 Chrystal, K. Alec, 172n
cycle theory; Real business in growth process, 6566 Classical adjustment process, 499
cycle theory; Recession(s) Capital market integration, 314 Classical AS curve, 98101, 104
in AS-AD model, 557558 Capital markets; see Financial Classical economics
definition, 14 markets aggregate demand policy, 104106
and inflation, 1517 Capital mobility, 313317; see also and crowding out, 281284
inventories in, 383384 Perfect capital mobility for monetary policy, 278279
and investment spending, 371 balance of payments/capital flows, time frame in, 105
money stock and inflation in, 315 Classical quantity theory of money,
461466 and investment flows, 318 405406
output gap, 1415 Mundell-Fleming model, 317320 Clean float, 304305, 502
random walk model, 556560 policy dilemmas, 315317 Cobb-Douglas production function,
and shifts in autonomous spending, Capital stock, 1114, 12 54n
227228 adjustment, 371373 constant returns to scale, 75
swings, 95 definition, 362 and demand for capital, 369
synchronized, 327 desired formula, 55, 62n, 368
Business fixed investment, 361362 effects of fiscal and monetary with labor-augmenting techniques,
credit rationing and, 373377 policies, 367369 71
discounted cash flow analysis, versus existing stock, 370371 Cochrane, John H., 556n
377378 and expected output, 365366 Cohen, Darrel, 235n
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
596 INDEX
Cohn, Richard, 167n Consumption-in-time relation, 338 Currency-deposit ratio, 414, 415
Cold-turkey policies, 188 Consumption-leisure tradeoff, 562 Currency depreciation, 306307
Collective bargaining agreements, Consumption spending, 2526 and change in money stock, 326
170; see also Labor contracts Consumption theory competitive, 326327
Commercial paper, 393 central point of, 335 expected, 523, 524
Competitive depreciation, 326327 disagreements about, 341 impact of, 313
Competitive economy, 7475 Keynesian theory, 337 and monetary approach to balance
Competitiveness, effect of exchange life-cycle hypothesis, 339342 of payments, 514515
rates, 521 life-cyclepermanent-income Currency devaluation; see
Compound interest, 437 hypothesis, 344348 Devaluation
Computer prices, 137 permanent-income hypothesis, Currency revaluation, 307
Conditional convergence, 8283 342343 Current account
Congressional Budget Office, 155, random walk model, 345 definition, 300301
156n, 162, 190 and tax policy, 338 J-curve effect, 511
Conservatives, on policy mix, Contractionary policy, 196197 percentage of GDP, 529
287288 Convergence, 5657 Current account deficit, 301302,
Consols, 441 in endogenous growth model, 321, 498
Constant dollars, 37 8283 adjusting, 499506
Constant-growth-rate rule, 198199 Cooper, Russell, 371n and dollar bubble, 528529
Constant marginal product of capital, Coordination approach, 127128 unsustainable, 528529
79 Corn economy, 222 Current consumption, 337
Constant returns to scale, 75, 7981 Corporate income tax, 366 Current dollars, 37
Consumer confidence, 101 Cost of capital Current output, 35
Consumer price index, 15 in investment decision, 375 Cyclically adjusted surplus, 234
indexing wages to, 170 replacement, 369370 Cyclical unemployment, 151
overstating inflation, 4041 and stock market, 369370 costs of, 161162
purpose, 4042 Cost of holding money, 253254 distributional effect, 162
Consumption Cost-of-living adjustments, 170
and aggregate demand, 219 Countercyclical fiscal policy, 459 D
and autonomous spending, 221 Coupon, 439 Danziger, Sheldon, 167n
Barro-Ricardo equivalence Crawling peg, 507 Darby, Michael, 453n, 454
proposition, 349353 Credibility, 189190, 473 Darity, William, 145n
and buffer-stock saving, 347348 Credibility bonus, 471472 Davies, Glyn, 396n
current vs. lagged, 337 Credible policy, 471472 Debt, indexed, 169
and demography, 340 Credit; see also Domestic credit Debt-income ratio, 484, 485
and disposable income, 218, 219 money and interest rates, 427429 Debtors, effect of inflation, 167
of durable goods, 336n, 342 in recession of 199091, 428429 Decision lag, 185186
excess sensitivity, 345346 Credit controls, 376 Decision making
excess smoothness, 345346 Credit crunch, 429 dynamic programming, 207
Fisher diagram, 350 Creditors, effect of inflation, 167 effect of inflation, 164
income relationship, 218 Credit rationing, 373377 Deep parameters, 562
individual demands, 216n definition, 374, 376, 429 Deflator, 39
international differences on saving reasons for, 376 DeJuan, Joseph, 346n
rates, 353355 Credit system, illiquid, 419 De Long, J. Bradford, 206, 453n
linked to income, 335337 Credit targets, 427 Demand deposits, 392
liquidity constraint, 346347 Croushore, Dean, 123n, 471n Demand for capital, 361362
and myopia, 346347 Crowding out and Cobb-Douglas production
percentage of aggregate demand, and classical case, 281284 function, 369
335 definition, 280281 theory of investment, 361362
and saving, 216217, 339 effect of fiscal policy, 279284 Demand for labor, 129130
saving and interest rates and, 349 importance of, 283284 and frequency of unemployment,
share of GDP, 26 Currencies, 392 153
spending on domestic goods, hysteresis effects of overvaluation, Demand for money
310311 511 Baumol-Tobin model, 398399,
steady-state, 88 in money supply, 413 409410
and stock market, 348 pegged to dollar, 531 definition, 391
under uncertainty, 344345 and purchasing power parity, effect on interest, 260
Consumption function 308310 empirical evidence, 400404
and aggregate demand, 216222 Currency account lagged adjustment in interest
definition, 216 J-curve effect, 511 rate, 401
equation, 335 and relative prices, 508 M1 demand, 401402
with government sector, 226 Currency appreciation, 306307 M2 demand, 402404
income assumption, 339 from fiscal expansion, 529530 essential properties, 402
intercept, 216 and foreign exchange intervention, and high inflation, 403
and savings function, 217 525526 and income elasticity, 401
slope, 216 Currency boards, 512n, 532533 during inflation, 461
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
INDEX 597
and interest elasticity, 400 Distributed lag, 187188 Economic depreciation, 363
and monetary approach to balance Distributional consequences of Economic efficiency, of Social
of payments, 513 unemployment, 145146, 162 Security, 489
and money supply changes, Distributional costs of inflation, 146 Economic forecast, 546
271272 Disturbances Economic models
real vs. nominal, 253254, 396 adjustment to, 323324 definition, 189
theories, 396400 duration, 183185, 198 definition and purpose, 1213
benefits vs. interest costs, 397 forecasting, 190191 Lucass view, 125
in Keynesian economics, 397 monetary or nonmonetary, 520 of macroeconomics, 411
precautionary motive, 397, 399 policy regime change and, uncertainty about, 191192
speculative demand, 397, 189190 validity, 190191
399400 in real business cycle theory, 543 Economic parameters, 560, 562
transactions demand, 397399 recognition lag, 185 Economic policy; see also Aggregate
Demand for real money balances, Dixit, Avinash K., 377n demand policy; Growth
253254 Dixon, Huw D., 544n policy; Policies/policy
Demand management policies, 100; Dollar in Germany 199092, 293295
see also Aggregate demand constant vs. current, 3738 in Great Depression, 454456
policy currency pegged to, 303n and Phillips curve, 204
Democracy, and central bank drop in purchasing power and uncertainty, 191194
independence, 206 19722002, 164165 in United States in 1980s,
Demography, and consumption, 340 exchange rate with yen, 306 288290
Deposit insurance, 415 fluctuating value of, 95 Economic Report of the President, 46
Depreciation; see also Currency and GDP deflator, 3940 Economic variables, 194195
depreciation impact of depreciation, 313 Economies of scale in money
in GDP, 23 in international trade, 299 management, 399
and investment, 363 in nominal GDP, 103 Economist, 18
and rental cost of capital, 365 overvaluation, 511 Economy
Desired capital stock, 365373 price levels in U.S. and Mexico, barter, 394396
Destabilization, 184 508 benefits of inflation, 171172
Deuker, Michael, 438n and real exchange rate, 308 big picture view of, 95
Devaluation, 306307 Dollar appreciation duration of disturbances,
British pound, 303 in 1980s, 519, 526527 183185
definition, 501 Dollar bubble, 528529 in equilibrium, 219220
delay of, 400 Dollarization, 531, 532533 escape from low-level equilibrium,
real, 503505 Domestic credit, 513514 86
to restore trade balance, 501502, ceiling, 513514 fluctuations in, 5
509 curtailing, 514 with hyperinflation, 466467
Developed countries, 56 Domestic goods, 310311 impact of tax cuts, 106108
Developing countries, 56 Domestic spending, 310311 with imperfectly anticipated
Devereux, Paul J., 127n Dow Jones Industrial Average, and inflation, 164168
Diamond, Douglas, 415 crash of 1929, 456 inherent instability, 464465
Diamond, Peter A., 396n, 490n Downsizing, 154 international linkages, 299300
Dickens, William T., 171 Drazen, Allan, 173n Japan-U.S. convergence,
Difference stationary variable, 557 Driver, R., 532 5657
Diminishing marginal product of Durable goods, 28 macroeconomic behavior, 3
capital, 79, 365 Durable goods consumption, manageable essentials, 3
Direction of exchange rates, 307 336n, 342 with perfectly anticipated inflation,
Dirty float, 305, 502, 525526 Duration of unemployment, 151152, 163164
Discounted cash flow analysis, 152153, 154 in poverty trap, 8586
377378 Dwyer, Gerald, 475n price adjustment mechanism,
Discount rate, 418420 Dybvig, Philip, 415 112115
changes in, 421 Dynamic behavior, 373 protection from resource-depletion
in United States 20002002, 412 Dynamic inconsistency disasters, 89
Discouraged workers, 147n, 149 and central bank independence, recovery of 1990s, 154
Discrete lag, 187 205206 role of money, 240
Discretionary government spending, formal approach, 207208 simple, 3031
480 and rules vs. discretion, 203208 steady-state, 63
Disinflation, 146 Dynamic programming, 207 steady-state equilibrium, 61
Reagan-Volcker, 473 Dynamic scoring, 107 Edison, Thomas A., 37
and sacrifice ratio, 472474 Dynan, Karen E., 342n, 348n Educational attainment, 60
in United States, 471 Efficiency wage theory, 128, 130
Disintermediation, 415 E Ehrenberg, R., 158
Disposable income, 3132, 216n East Asian growth, 8788 Ehrlichman, John, 206
changes in, 335336 Easterly, William, 90n, 164n, 167n Eichengreen, Barry, 458n, 531n
and consumption, 218, 219 Economagic.com, 19, 46 Eisner, Robert, 36, 363, 482
definition, 226 Economic data, 46 Employed person, 147148
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
598 INDEX
INDEX 599
monetary policy 1980s90s, effect on aggregate demand, perfect capital mobility under,
196197 324325 317320
monetizing budget deficit, 283 effect on income and interest rate, and rate of return, 318
money creation, 271272 279280 role of exchange rate in, 502
money stock targets, 424427 under fixed exchange rates, 320 Fixed productive capacity, 4, 68
money supply control, 255 and full crowding out, 282283 Fixed Reproducible Tangible Wealth
open market desk, 423424 monetary policy during, in the United States, 28n
open market operations, 270272 283284 Flavin, Marjorie, 345n, 347n
pegging interest rate, 276277 in united Germany, 321 Fleming, Marcus, 317
policy tools in United States, 327 Flexible exchange rates, 303305
discount rate, 418420 Fiscal policy adjustments under
Fed balance sheet, 417418 accommodating, 136 to change in money stock,
Fed funds rate, 420 action lag, 185186 325326
financing budget deficits, capital account, 314315 exchange rate overshooting,
421422 in classical case, 279 517519
foreign exchange intervention, countercyclical, 459 external competitiveness, 521
418 and crowding out, 279284 monetary expansion, 516517
open market purchases, 416417 decision lag, 185186 process, 515516
reserve ratio, 421 definition, 226 purchasing power parity,
reaction to deficits, 475, 476 effect of changes in budget, 519521
in recession of 199091, 291, 292, 232233 to real disturbances, 323324
428429 effect on rental cost of capital, interdependence effects, 527530
response to weakening economy, 367369 in monetarism, 465
269 effects of change in, 228229 perfect capital mobility under,
speed of action, 186 for fine tuning, 194198 320327
survey on cash holdings, 395 and full-employment budget Flight out of money, 403
target options, 430 surplus, 233235 Floating exchange rates, 4546,
ultimate targets, 430 in Germany 199092, 293295 304305, 525; see also
Feedberg, D., 228n in Great Depression, 455457 Flexible exchange rates
Feldstein, Martin, 3, 157n heterodox programs, 468 Floating rate loan, 169
Female unemployment, 149, 150 and high-employment surplus, Flood, Robert, 505n
Fender, John, 471n 234235 Fluctuations; see also Business
Final goods, 35 increase in government spending, cycles; Disturbances
Finance, 299 279284 in economy, 5
Financial assets, 391392 lags in, 188 and multiplier, 224
Financial innovation, 394, 402 and liquidity trap, 281 in output, 8, 541543
Financial intermediation, 427428 overseas effect, 528529 in random walk model, 541
Financial markets in policy mix, 284288 in real output, 215
arbitrage in, 425 in portfolio of policy instruments, Forecast errors, 548, 549
bond prices and yields, 438441 192 Forecasts
exchange rates and interest rates, purpose, 269 Blue Chip, 190
446447 in recession of 199091, 290291, validity of, 190191
function, 435 428429 Foreign exchange market
inflation expectations, 403 rules vs. discretion, 198201 daily turnover, 299
interest rates, 435441 side effects, 199 intervention in, 418
and random walk of stock prices, temporary investment tax credit, ad hoc, 532
441445 370 definition, 525
and yield curve, 428, 439 Fiscal policy multiplier, 264265 reasons for, 525526
Financing balance-of-payments Fischer, Stanley, 164n, 167n, 202n, sterilization operations, 512
deficits, 498 467n sterilized or nonsterilized,
Fine tuning, 195198 Fisher diagram, 350 526527
side effects, 199 Fisher relationship, 523 Foreign trade, 3134
Firms Fixed exchange rates, 4546, Foundations of Economic Analysis
borrowing vs. equity, 369 302303 (Samuelson), 83
capital stock adjustment, 371373 automatic adjustment with, 499 Fractional reserve baking, 413
costs and prices, 132 delay of devaluation, 500 France
and credit rationing, 373377 endogenous money stock, 320 unemployment rate, 42
in long-term labor contracts, external and internal balance working age/retirement age
128130 under, 316 population, 488
reasons for holding inventories, financing adjustments, 498 Frankel, Jeffrey A., 201n, 309n,
381 fiscal expansion under, 320 521n, 529
setting and changing prices, 564 international adjustments with, Frenkel, Jacob A., 513n, 530n, 531n
sources of funds, 374375 496508 Frequency of unemployment,
Fiscal expansion intervention in, 303 152153
and currency appreciation, monetary expansion under, Frictional unemployment, 101,
529530 319320 149151
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
600 INDEX
Friedman, Benjamin M., 194195, Ghana, GDP, 5354, 7778 Government saving, 354
376n, 401n, 427, 428n, 430n Globalization, 299 Government sector, 225230
Friedman, Milton, 3, 16n, 127, 195, GNP; see Gross national product effects of change in fiscal policy,
341, 342, 403, 419, 453n, 454, Goffe, Bill, 18 228229
455n, 460, 461n, 464465, Golden rule level of saving, 88 effects on equilibrium income,
467n, 472, 494, 525n Goldfeld, Stephen, 401n 225227
Froot, Kenneth A., 309, 529 Gold holdings, 418n income tax as automatic stabilizer,
Full employment, 119 Goldsmith, Arthur, 145n 227228
in classical AS curve, 9899 Gold standard, 432 income tax multiplier, 227
concept, 1415 Goldstein, Morris, 530n Gradualist policies, 188
and crowding out, 283284 Goodhart, Charles A. E., 185186 Gramlich, Edward, 490n
determinants of natural rate, Goods and services Grand Coulee Dam, 482
152153 aggregate demand for, 215 Great Depression, 160
estimates of natural rate, 153156 in consumer price index, 4042 bank failures, 415, 454455
frequency of unemployment, 153 consumption spending, 2526 description of, 95, 453458
hysteresis and rising natural rate, domestic spending on, 310311 economic policy, 454457
153156 government purchases, 27 institutional changes, 458
meaning of, 234 net exports, 2829 international aspects, 457458
and natural rate of unemployment, quality improvements, 36 economic statistics, 454
101 Goods market government expenditures and
policies to create, 499 equation, 242, 263 revenues, 455
policy mix for, 285287 equilibrium, 311313 issues and ideas from, 458460
reducing natural rate, 157 equilibrium in, 101, 102103, Keynesian explanation, 459460
transitory deviations, 540541 259261 monetarist challenge, 460
unemployment benefits and, 157 equilibrium schedule, 244, 248 synthesis, 460461
and wage stickiness, 126127 and IS curve, 244252 origin of Keynesian aggregate
Full-employment budget deficit, 234, Gordon, David B., 203n supply curve, 99
235 Gordon, Robert J., 37, 41, 89n, 156, Greenspan, Alan, 196197, 292, 412,
Full-employment budget surplus, 544n 419
233235 Gourinchas, Pierre-Olivier, 348n Grilli, Vittorio, 206n
Full-employment deficit, in recession Government, 3134 Gross, David B., 347n
of 199091, 292 Government assets, 481482 Gross, Herschel, 551n
Full-employment output, 15 Government bonds, Barro-Ricardo Gross domestic private investment, 28
Fundamental national income equivalence proposition, Gross Domestic Product; see also
accounting identity, 25 349352 National income accounting;
Funke, Norbert, 500 Government budget; see also Budget Nominal GDP; Real GDP
Future value, 440 deficit; Budget surplus actual and potential, 558
deficits and surplus, 230235 and average years of schooling, 60
G effects of government and components of demand, 26
Gali, Jordi, 542n purchases/taxation, 232233 composition of, 24
Gallup poll, 173 full-employment surplus, 233235 costs of unemployment, 145
Gallup Report, 143 on-budget/off-budget items, 231 current account percentage of, 529
Galor, Oded, 85n Government budget constraint, 474 data sources, 46
Gavin, William T., 202n Government capital stock, 363 definition, 22
GDP; see Gross Domestic Product Government expenditures, 27 federal debt as percentage of, 34
GDP deflator, 462 Barro-Ricardo equivalence in Germany 198992, 295
and consumer price index, 4041 proposition, 349353 of Ghana, 7778
definition, 39 components, 481 government purchases share of, 27
indexing wages to, 170 discretionary, 480 government revenues share
Geanakoplos, John, 490n effect of increase in, 279284 of, 481
General Motors, 28 during Great Depression, 455 government spending percentage
General Theory of Employment, and liquidity trap, 281 of, 486
Interest and Money (Keynes), mandatory, 480 and GDP, 23
458459 percentage of GDP, 486 growth estimates, 5758
Generational accounting, 485 shocks to, 543 and growth rate, 1114
Germany size-of-government debate, inflation and price indexes, 3738
in Great Depression, 458 486487 investment percentage of,
hyperinflation, 403, 467 Government investment, 363 373374
money market rate, 522 Government outlays, 480481 and level of inventory
policy mix 199092, 293295 Government purchases, 481 investment, 382
unification and external problems, component of AD, 27, 225226 loss in recession of 20012002,
321 effects on budget surplus, 232233 162
unit labor costs, 521 Government revenues measuring
working age/retirement age in Great Depression, 455 current output, 35
population, 488 share of GDP, 481 final goods and vale added, 35
Gertler, Mark, 376n, 427 sources, 475480, 481 problems with, 3536
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
INDEX 601
602 INDEX
INDEX 603
604 INDEX
INDEX 605
606 INDEX
INDEX 607
608 INDEX
Output, continued Patinkin, Dan, 272n, 459460 origin and purpose, 117119
in AS-AD model, 95 Pay-as-you go system, 487, 489 policy trade-off, 119120
in classical AD policy, 104 Peak, 14 and price adjustments, 10, 11
Cobb-Douglas production function, Peel, David A., 172n without price expectations, 120
75 Pegged exchange rates, 303n and prices, 119
current, 35 Pegging the interest rate, 276277, rational expectations revolution,
cyclical component, 556 423 124125
determinants, 6 Per capita consumption, 335336 and sacrifice ratio, 146
and disposable income, 3132 Per capita GDP, 5, 56 short-run, 121122, 125
domestic, 310311 national comparisons, 78 and stagflation, 112, 122123
effect of changes in factors of in Norway, 59 unemployment gap, 118119
production, 61 and population increase, 5758 for United Kingdom, 118
effect of multiplier, 222225 of United States in 2000, 22 wage-employment relationship,
and equilibrium income, 219220 Per capita income, steady-state 126131
equilibrium level, 215 values, 63 wage inflation, 117119
expected from capital stock, Per capita output, 56 Physical capital, 363
365366 Per capita production function, national comparisons, 6465
fluctuations, 215, 224, 541543 6263 Pindyck, Robert, 192n, 377n
with full employment, 99 Per capita real income growth rates, Plosser, Charles I., 541, 556, 558,
interaction with LM and IS curves, 13 560
260 Perfect capital mobility, 515 Policies/policy
IS curve shifts, 426 adjustment to real disturbances, active intervention, 184
linked to unemployment, 132 323324 activist, 195201
long run, 7 definition, 314 fine tuning, 195198
long-run level of, 6768 with fixed exchange rates, opposition to, 195
and marginal propensity to 317320 rules vs. discretion, 198201
consume, 221 under flexible exchange rates, certainty-equivalence, 194
in medium run, 10 320327 credibility, 471472
and monetary policy, 426 Perfect competition, 563 and duration of disturbances,
money, inflation and, 463 Perfect foresight model, 546547 183185
and money growth, 550551 Permanent disturbances, 183185, dynamic inconsistency
and money supply, 9597 198 and central bank independence,
national comparisons, 6465 Permanent income, 341342 205206
and policy mix, 284285 measurement, 342 formal approach, 207208
poor measurement of, 36 Permanent-income hypothesis, 339, and rules vs. discretion,
price level rise, 552555 342343 203208
production and demand sides, 22 versus life-cycle hypothesis, 341 and economic models, 189,
in production function, 5457 origin of, 341 190191
production of, 2223 Permanent inflation-unemployment expectations and reactions,
ratio of investment to, 385 trade-off, 120 188191
sacrifice ratio, 144, 146 Permanent shocks, 557559 changes in policy regime,
and saving and investment, Permanent supply shock, 137 189190
221222 Perpetuities, 441 reaction uncertainty, 178
in short run, 89 Perron, Pierre, 559 formulation exercise, 182183
in simple economy, 30 Perry, George L., 171 impossibility of avoiding, 181
and social infrastructure, 8990 Personal saving, 354 indicators, 194195
steady-state, 66 Petersen, Bruce C., 375 instruments, 194195
in supply-side policy, 107108 Phelps, Edmund S., 127, 153, 552n investment subsidy, 285, 286
trend component, 556 Phillips, A. W., 117, 118 lag effects, 182188
Output gap, 113 Phillips curve, 116120 limits of, 181
in business cycle, 1415 and aggregate supply curve, and multiplier uncertainty, 192,
definition, 15 131134 193194
Output-inflation trade-off, 146 coordination approach, 127128 negative feedback, 200
Output shock, 556, 557 definition, 116 to restore balance
Output targeting, 202 dynamic inconsistency and, devaluation, 501502
Output-unemployment tradeoff, 149, 203205 expenditure reduction,
161162 dynamic programming and, 207 499506
Outside lag, 184185, 187188 and economic policy, 204 expenditure switching, 499506
Overvaluation, 511 evidence for, 124 by tariffs, 500501
Owner-occupied homes, 364 and inflationary bias, 203204 rules vs. discretion, 203208
Own rate of interest, 397 inflation-expectations-augmented, target choices
120124 inflation, 202203
P and inflation targeting, 203 nominal GDP, 201
Pabilonia, Sabrina Wulff, 157n and market clearing, 127 real GDP, 201
Parker, Jonathan A., 348n, 355n and NAIRU, 156n targets, 194195
Parkin, Michael, 465 and Okuns law, 132133 Taylors rule, 200
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
INDEX 609
610 INDEX
INDEX 611
Saving rate and economic efficiency, 489 crash of 1987, 196, 456
correlated across countries, 77 indexed, 169170 linked to bond market, 445
and growth rate, 56 intergenerational transfers, q theory of investment, 369370
international differences, 353355 487489 returns vs. interest rate,
in neoclassical growth theory, pay-as-you-go system, 487, 489 444445
6669 predicted crash, 490 rise and fall 19922001, 446
Savings bonds, 393 and price indexes, 4041 Stock prices
Savings deposits, 392 reform proposals, 489490 in Canada, 441442
Schieber, Sylvester J., 490n Social Security Administration, 457 random walk theory, 441446
Schooling, and GDP, 60 Social Security Trust Fund, 487n, Store of value, 395, 399400
Schuler, K., 512n 489 Structural surplus, 234
Schwartz, Anna J., 419, 453n, 454, Solow, Robert M., 3, 5758, 61, Substitution effect, 351
455n, 460, 465, 494, 512n 130n, 156n, 185 Summers, Lawrence, 156n, 542n
Search unemployment, 153 Solow growth model, 7880, 82 Summers, Robert, 77n
Seater, John, 346n and population growth, 85 Supply, and costs, 132
Securities and Exchange Solow residual, 58, 70 Supply shocks, 8n
Commission, 457 Souleles, Nicholas S., 347n accommodation of, 136137
Seigniorage South Korea, growth in, 8788 adverse, 134136
definition, 475 Speculative bubble, 528529 definition, 134
measure of, 479n Speculative capital flows, 523524 favorable, 138
Seligman, Edwin, 466n Speculative demand for money, transitory or permanent, 137
Shaffer, Jeffrey, 527n 399400 wage indexation for, 170171
Shafir, Eldar, 396n Speed of price adjustments, 114 Supply-side economics, 106108,
Shapiro, Matthew D., 4041 Spell of unemployment, 151 233n
Share prices, 369370 Spillover effects, 527530 Survey of Current Business, 46
Sheffrin, Steven, 195n Stabilization Svensson, Lars O. E., 202n
Shiller, Robert J., 348n in Bolivia, 469 Sweden
Shimer, Robert, 149n heterodox programs, 469, 470 in Great Depression, 458
Shocks, 7n money growth following, 470n job finding, 160
and activist policies, 195 Stabilization policy, 184, 459
to government spending, 543 Stable equilibrium, 86 T
money supply, 8n Stagflation, 112, 122123 Tabellini, Guido, 206n
permanent or transitory, 557559 Staggered price adjustments, 130 Taiwan
to productivity, 543 Staggered wage-setting, 129130 growth in, 8788
Short-run aggregate supply curve, Staiger, Douglas, 156 investment ratio and schooling, 60
89, 98, 99101, 116 Standard and Poors 500 index, Takagi, Shinji, 529
Short-run economic model, 4, 89 444445 Tanzi, Vito, 470n
Short-run Fed targeting, 426427 Standardized budget surplus, 234 Tanzi-Olivera effect, 470n
Short-run Phillips curve, 121122, Standard of deferred payment, 396 Targets, of policy
125, 207 Starr, Ross, 394n inflation, 202203
and sacrifice ratio, 146 Startz, Richard, 544n intermediate, 194
Short-run price stickiness, 99 Statistics Canada, 46 nominal GDP, 201
Short-term interest rates, 435438 Steady state, 63 output, 202
Short-term Treasury securities, 393 versus continued growth, 84 real GDP, 201
Shoven, John B., 490n definition, 65 ultimate, 194
Sichel, Daniel, 401n Steady-state consumption, 88 Target zones, 531532
Siklos, Perre, 473 Steady-state equilibrium, 61, 6768 Tariffs, 500501
Silvestre, Jacquim, 544n Steady-state income, 82 Taussig, Frank, 507
Simple economy, 3031 Steady-state output and investment, Taxation
Sims, Christopher A., 191 66 and consumption theory, 338
Singapore Stein, Herbert, 187n distributional effect of inflation,
growth in, 8788 Stein, Jeremy, 428n 168
investment ratio and schooling, 60 Sterilization operations, 512 dynamic scoring, 107
Size-of-government debate, 486487 Sterilized intervention, 526527 effect on marginal propensity to
Skinner, Jonathan S., 342n Stewart, Jimmy, 415 consume, 226227
Slope Sticky real wage, 509 effects on budget surplus, 232233
of aggregate demand schedule, 221 Stiglitz, Joseph, 61n, 376 and housing costs, 380
of consumption function, 216 Stochastic dynamic general of interest, 163n
of IS curve, 248249 equilibrium, 567 investment tax credit, 285
of LM curve, 257 Stock, James H., 156 mortgage interest deduction,
Small time deposits, 393 Stock and flows of capital and 168169
Smith, J., 158 investment, 362, 364373 national differences, 314
Snower, Dennis J., 131n, 160n Stock market proportional income tax, 226
Social infrastructure, 8990 and consumption, 348 and rental cost of capital, 366367
Social returns to capital, 81 and cost of capital, 369370 in supply-side economics, 106108
Social Security, 487490 crash of 1929, 453, 456 Tanzi-Olivera effect, 470n
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
612 INDEX
Tax brackets, indexed, 168 Transfer payments, 27, 481 distributional impact, 162
Tax cuts, 189 in current account, 300 in GDP, 145
of 2001, 185, 292293 effect on autonomous spending, 229 offsetting benefits, 162
impact on AS-AD model, 107 effect on income and output, 226 cyclical, 151
Taylor, John B., 129n, 199n, 200, Transitory disturbances, 183185, discouraged workers, 147n, 149
376n 198 and downsizing, 154
Taylor, Mark, 515n, 530n Transitory income, 341342, 343 effect of crowding out, 283
Taylor, Robert, 3 Transitory shocks, 557559 frequency of, 152153
Taylors rule, 210 Transitory supply shock, 137 frictional, 101, 149151
Technical progress Transmission mechanism and insider-outsider models, 131,
and growth, 55 bank lending, 278 159160
measuring, 58 stages, 272273 in Japan, 160
Technological obsolescence, 363 Travelers checks, 392 in Keynesian AS curve, 99
Technological progress Treasury bills, 394, 401402 long-term, in Europe, 160
and favorable supply shocks, 138 compared to S&P 500, 445 misery index, 174
formula, 70 interest rate, 43, 240, 412, offsetting benefits, 162
Technology 428429, 435436 and Okuns law, 132133
in endogenous growth model, and velocity of money, 405 in political business cycle,
8182 Treasury bonds, interest rates, 173174
and environmental protection, 89 435436 poll results, 143
and growth rate, 56 Treasury Department, indexed debt, in recession of 197576, 136
labor-augmenting, 69, 71 169 in recessions, 15
Technology growth formula, 82 Trend, 556 search, 153
Teenage unemployment, 149, 150, Trend path of real GDP, 1415 signal of long-term, 156
157 Trend stationary variable, 557 in stagflation, 122123
in Europe, 160 Trend stationary with breaks, 559 Unemployment benefits, 157161
Teenage wages, 157 Trough, 14 as automatic stabilizer, 187, 228
Temin, Peter, 459n Tversky, Amos, 396n effect on natural rate, 161
Temple, Jonathan, 77n Two-sector growth models, 8384 and employment stability, 160
Term premium, 437 in Europe, 157160
Term structure of interest, 435 U experience rating, 160
equation, 437 Ultimate targets, 194, 430 increasing unemployment, 157
expectations theory, 437, 438 Unanticipated inventory investment, reporting effects, 161
Terrorist attack of 2001, 186 382383 Unemployment gap, 118, 132133
Thatcher government, 471 Uncertainty Unemployment hysteresis, 156
Thornton, Daniel, 424n about economic models, 191192 Unemployment-output relation, 145
Tight money policy, 290 and buffer-stock saving, 347348 Unemployment pool, 148149
Time deposits, 393 consumption under, 344348 Unemployment rate
Timing of investment, 373377 over duration of disturbances, by age, sex, and race 19482002,
Tinsley, P. A., 190 182185 150
Tobin, James, 3, 156n, 171, 387n, inflation expectations, 124 constant-growth-rate rule, 198199
400 and policies, 191194 definition, 42
Topel, Robert, 147n in policy formulation, 183184 at full employment, 234
Tornell, Aaron, 506n reaction to policy, 189 in Great Depression, 453
Total factor productivity, 55, 70 reasons for, 189192 versus inflation rate, 1011
in Asian Tigers, 8788 Uncovered interest parity, 447 increased by benefits, 157
Solow residual, 58 Unemployed person, 147 international perspective, 158159
Total incomes system of accounts, Unemployment; see also Inflation- reasons for changes, 149
28n unemployment trade-off; in recession of 1970s, 288
Total transactions, 404n Natural rate of recession of 198182, 196
Townsend, Robert M., 347n unemployment; Phillips curve in recession of 199091, 292
Toyota Motors, 510 actual and notional rates, 155 reporting effects, 161
Tract on Monetary Reform (Keynes), anatomy of, 147152 of teenagers, 157
467n cyclical unemployment, 149151 in United States 19602000,
Trade balance, 300, 315 duration, 151152 116117
depreciation-induced, 327 frictional unemployment, in United States 19611969, 119
J-curve effect, 510511 149151 in United States 19612002, 121
Trade balance equilibrium schedule, key characteristics, 147 in United States 19722002, 289
498 reasons for, 148 United States and Japan, 4243
Trade deficit, 3233, 498 terminology, 147148 variations across groups, 149
Trade linkage, 299300 unemployment pool, 148149 Unexpected inflation, 146
Trade surplus, 3233 variation across groups, 149 Union labor contracts; see Labor
Transaction costs, 398399 costs of, 16, 144 contracts
Transactions demand for money, cyclical, 161162 United Kingdom
397399 distributional consequences, devaluation in, 303, 500
Baumol-Tobin model, 409410 145146 in Great Depression, 458
DornbuschFischerStartz: Back Matter Index The McGrawHill
Macroeconomics, Ninth Companies, 2004
Edition
INDEX 613