British debate on economic policy is getting nowhere. The coalition government keeps repeating that it has to cut spending in order to cut deficits, no matter what. The opposition has been at pains to explain … that trying to cut deficits by cutting spending in a stagnant economy is a largely self-defeating exercise, as it reduces growth and thus tax revenue. It is sticking to its plan A because spending cuts are not about deficits but about rolling back the welfare state.
The reason is that central banks react to variables, such as inflation and the output gap, which are endogenous to monetary policy shocks.
Endogeneity implies a correlation between regressors and the error term, and hence, an asymptotic bias. In principle, Instrumental Variables IV estimation can solve this endogeneity problem.
In practice, IV estimation poses challenges as the validity of potential instruments also depends on other economic relationships. We argue in favor of OLS estimation of monetary policy rules. To that end, we show analytically in the three-equation New Keynesian model that the asymptotic OLS bias is proportional to the fraction of the variance of regressors accounted for by monetary policy shocks.
Using Monte Carlo simulation, we then show that this relationship also holds in a quantitative model of the U. As monetary policy shocks explain only a small fraction of the variance of regressors typically included in monetary policy rules, the endogeneity bias is small.
Using simulations, we show that, for realistic sample sizes, the OLS estimator of monetary policy parameters outperforms IV estimators.The social and economic consequences of the global financial crisis (GFC) of –9 has had serious impacts on population health, economic prospects, and overall wellbeing in all generations, particularly Millennials, Generation X, and Baby Boomers.
The ways in which intergenerational inequality. The origins of the financial crisis Crash course. The effects of the financial crisis are still being felt, five years on.
This article, the first of a series of five on the lessons of the.
The global financial crisis, brewing for a while, really started to show its effects in the middle of and into Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade benjaminpohle.com emerging in the late 19th century during the first modern wave of economic globalization, its evolution is .
Countries in Asia continue to face challenges with controlling the spread of infectious diseases including HIV, avian influenza, malaria and tuberculosis (TB), which cross national boundaries. "Erudite, fun to read, and sure to be a classic, The End of Theory discards the standard paradigms of economics.
Financial crises, Bookstaber argues, are best modeled as they occur in reality: the heuristic interactions of humans in a complex environment.".