Knowledge, Information, and Expectations in Modern Macroeconomics: In Honor of Edmund S. Phelps

by Philippe Aghion (Editor), Roman Frydman (Editor), Joseph E. Stiglitz (Editor), Michael Woodford (Editor)

Overview

Macroeconomics would not be what it is today without Edmund Phelps. This book assembles the field's leading figures to highlight the continuing influence of his ideas from the past four decades. Addressing the most important current debates in macroeconomic theory, it focuses on the rates at which new technologies arise and information about markets is dispersed, information imperfections, and the heterogeneity of beliefs as determinants of an economy's performance. The contributions, which represent a breadth of contemporary theoretical approaches, cover topics including the real effects of monetary disturbances, difficulties in expectations formation, structural factors in unemployment, and sources of technical progress. Based on an October 2001 conference honoring Phelps, this incomparable volume provides the most comprehensive and authoritative account in years of the present state of macroeconomics while also pointing to its future.


The fifteen chapters are by the editors and by Daron Acemoglu, Jess Benhabib, Guillermo A. Calvo, Oya Celasun, Michael D. Goldberg, Bruce Greenwald, James J. Heckman, Bart Hobijn, Peter Howitt, Hehui Jin, Charles I. Jones, Michael Kumhof, Mordecai Kurz, David Laibson, Lars Ljungqvist, N. Gregory Mankiw, Dale T. Mortensen, Maurizio Motolese, Stephen Nickell, Luca Nunziata, Wolfgang Ochel, Christopher A. Pissarides, Glenda Quintini, Ricardo Reis, Andrea Repetto, Thomas J. Sargent, Jeremy Tobacman, and Gianluca Violante. Commenting are Olivier J. Blanchard, Jean-Paul Fitoussi, Mark Gertler, Robert E. Hall, Robert E. Lucas, Jr., David H. Papell, Robert A. Pollak, Robert M. Solow, Nancy L. Stokey, and Lars E. O. Svensson. Also included are reflections by Phelps, a preface by Paul A. Samuelson, and the editors' introduction.

Product Details

ISBN-13:	9780691223933
Publisher:	Princeton University Press
Publication date:	01/12/2021
Sold by:	Barnes & Noble
Format:	eBook
Pages:	592
File size:	8 MB

About the Author

Philippe Aghion is Professor of Economics at Harvard University and at University College London. Roman Frydman is Professor of Economics at New York University. Joseph Stiglitz, Professor of Economics at Columbia University, was awarded the Nobel Prize in Economic Science in 2001. Michael Woodford is the Harold H. Helm '20 Professor of Economics and Banking at Princeton University.

Table of Contents

Contributors ix

Edmund Phelps, Insider-Economists Insider, Paul A. Samuelson 1

Edmund S. Phelps and Modern Macroeconomics, Philippe Aghion, Roman Frydman, Joseph Stiglitz, and Michael Woodford 3

PART I Information, Wage-Price Dynamics, and Business Fluctuations

1 Imperfect Common Knowledge and the Effects of Monetary Policy, Michael Woodford 25

2 Comments on Woodford, Lars E. O. Svensson 59

3 Sticky Information: A Model of Monetary Nonneutrality and Structural Slumps, N. Gregory Mankiw and Ricardo Reis 64

4 A Theory of Rational Inflationary Inertia, Guillermo A. Calvo, Oya Celasun, and Michael Kumhof 87

5 Comments on Calvo, Celasun, and Kumhof, Mark Gertler 118

6 Macroeconomic Fluctuations in an Economy of Phelps-Winter Markets, Bruce Greenwald and Joseph Stiglitz 123

7 General Comments on Part I, Robert E. Lucas, Jr. 137

PART II Imperfect Knowledge, Expectations, and Rationality

8 Imperfect Knowledge Expectations, Uncertainty-Adjusted Uncovered Interest Rate Parity, and Exchange Rate Dynamics, Roman Frydman and Michael D. Goldberg 145

9 Comments on Frydman and Goldberg, David H. Papell 183

10 Endogenous Fluctuations and the Role of Monetary Policy, Mordecai Kurz with Hehui Jin and Maurizio Motolese 188

11 A Debt Puzzle, David Laibson, Andrea Repetto, and Jeremy Tobacman 228

12 Comments on Laibson, Repetto, and Tobacman, Robert A. Pollak 267

13 Reflections on Parts I and II, Edmund S. Phelps 271

PART III Determinants of Equilibrium Unemployment

14 How Monopsonistic Is the (Danish) Labor Market? Dale T. Mortensen 285

15 Company Start-Up Costs and Employment, Christopher A. Pissarides 309

16 European Unemployment: From a Worker s Perspective, Lars Ljungqvist and Thomas J. Sargent 326

17 Comments on Ljungqvist and Sargent, Olivier J. Blanchard 351

18 Flexibility and Job Creation: Lessons for Germany, James J. Heckman 357

19 The Beveridge Curve, Unemployment, and Wages in the OECD from the 1960s to the 1990s, Stephen Nickell, Luca Nunziata, Wolfgang Ochel, and Glenda Quintini 394

20 Comments on Nickell, Nunziata, Ochel, and Quintini, Jean-Paul Fitoussi 432

PART IV Education, Technical Change, and Growth

21 Wage Inequality and Technological Change: A Nelson-Phelps Approach, Philippe Aghion, Peter Howitt, and Gianluca Violante 443

22 Comments on Aghion, Howitt, and Violante, Robert E. Hall 462

23 Factor Prices and Technical Change: From Induced Innovations to Recent Debates, Daron Acemoglu 464

24 Comments on Acemoglu, Nancy L. Stokey 492

25 Population and Ideas: A Theory of Endogenous Growth, Charles I. Jones 498

26 Another View of Investment: 40 Years Later, Jess Benhabib and Bart Hobijn 522

27 General Comments on Part IV, Robert M. Solow 546

28 Reflections on Parts III and IV, Edmund S. Phelps 550

Index 565

What People are Saying About This

Kotlikoff

This is an outstanding volume full of important contributions by major figures in each of the fields in which Phelps has contributed. It would be worth publishing just for the excellent introduction! Indeed, it would also be worth publishing just for the extremely valuable comments. But the papers themselves are excellent. They will be read and reread by successive generations of economists who understand Phelps's critical role in the development of modern economics.
— Laurence J. Kotlikoff, Boston University

Foley

Many of the outstanding papers in this volume explore genuinely new ideas. The book addresses a large number of the hottest current macroeconomic policy issues and related theoretical problems.
— Duncan K. Foley, Graduate Faculty, New School University

Dominick Salvatore

This volume makes it clear that Edmund 'Ned' Phelps did not simply contribute to modern macroeconomics but in many ways he defined it; and that his work is remarkable for its breadth and for its vitality as a source of new ideas. The papers included here, each of which examines and develops a theme originally raised by Phelps, are at the very frontier of current macroeconomic research. Consistent with this breadth and vitality, this book will find a wide audience.
— Dominick Salvatore, Fordham University

From the Publisher

"This is a terrific book, about as good as volumes of collected papers will ever get. It will attract considerable interest, because it brings together so many of our most illustrious people in macroeconomics to reconsider the concepts of one of our most influential theorists, Ned Phelps."—Robert J. Shiller, Yale University, author of Irrational Exuberance

"This is an outstanding volume full of important contributions by major figures in each of the fields in which Phelps has contributed. It would be worth publishing just for the excellent introduction! Indeed, it would also be worth publishing just for the extremely valuable comments. But the papers themselves are excellent. They will be read and reread by successive generations of economists who understand Phelps's critical role in the development of modern economics."—Laurence J. Kotlikoff, Boston University

"This volume makes it clear that Edmund 'Ned' Phelps did not simply contribute to modern macroeconomics but in many ways he defined it; and that his work is remarkable for its breadth and for its vitality as a source of new ideas. The papers included here, each of which examines and develops a theme originally raised by Phelps, are at the very frontier of current macroeconomic research. Consistent with this breadth and vitality, this book will find a wide audience."—Dominick Salvatore, Fordham University

"Many of the outstanding papers in this volume explore genuinely new ideas. The book addresses a large number of the hottest current macroeconomic policy issues and related theoretical problems."—Duncan K. Foley, Graduate Faculty, New School University

Shiller

This is a terrific book, about as good as volumes of collected papers will ever get. It will attract considerable interest, because it brings together so many of our most illustrious people in macroeconomics to reconsider the concepts of one of our most influential theorists, Ned Phelps.
— Robert J. Shiller, Yale University, author of "Irrational Exuberance"

Editorial Reviews

"This is a terrific book, about as good as volumes of collected papers will ever get. It will attract considerable interest, because it brings together so many of our most illustrious people in macroeconomics to reconsider the concepts of one of our most influential theorists, Ned Phelps."—Robert J. Shiller, Yale University, author of Irrational Exuberance

"Many of the outstanding papers in this volume explore genuinely new ideas. The book addresses a large number of the hottest current macroeconomic policy issues and related theoretical problems."—Duncan K. Foley, Graduate Faculty, New School University

"This volume makes it clear that Edmund 'Ned' Phelps did not simply contribute to modern macroeconomics but in many ways he defined it; and that his work is remarkable for its breadth and for its vitality as a source of new ideas. The papers included here, each of which examines and develops a theme originally raised by Phelps, are at the very frontier of current macroeconomic research. Consistent with this breadth and vitality, this book will find a wide audience."—Dominick Salvatore, Fordham University

"This is an outstanding volume full of important contributions by major figures in each of the fields in which Phelps has contributed. It would be worth publishing just for the excellent introduction! Indeed, it would also be worth publishing just for the extremely valuable comments. But the papers themselves are excellent. They will be read and reread by successive generations of economists who understand Phelps's critical role in the development of modern economics."—Laurence J. Kotlikoff, Boston University

From the Publisher