Macroeconomics

We call attention to the class of models that serve as the foundation for the rational expectations hypothesis (REH). Models in this class rule out completely any structural change that cannot be fully anticipated with a probabilistic or other quantitative rule. REH models are abstractions of rational decision-making, but only in a hypothetical world in which participants can fully anticipate when and how they might revise their understanding of the process driving outcomes.

We propose several multivariate variance ratio statistics. We derive the asymptotic distribution of the statistics and scalar functions thereof under the null hypothesis that returns are unpredictable after a constant mean adjustment (i.e., under the weak form Efficient Market Hypothesis). We do not impose the no leverage assumption of Lo and MacKinlay (1988) but our asymptotic standard errors are relatively simple and in particular do not require the selection of a bandwidth parameter. We extend the framework to allow for a time varying risk premium through common systematic factors.

We develop adjustments to align the NIPA measures of key household flows with cash flow concepts that better reflect household budgets and demand.

How can we reconnect economic success to socioeconomic outcomes?

As the pace of financial crises quickens and the volatility of economic shocks intensifies, we need new ways to understand and respond to instability. This program coordinates our research efforts on finance, macroeconomics, and monetary economics.

Michael Greenberger discusses the current state of play of regulatory reform and gives a barely passing grade.

Rana Dasgupta shares his view of the contradictions and tensions of India’s economic and political scenes.

This chapter surveys experimental research on networks in economics.

It is highly fitting to have a panel devoted to ‘teaching economics’ in Paris. No less than 15 years ago, in 2000, in downtown Paris, a group of students from the École Normale Supérieure, one of France’s élite schools, wrote a petition asking economics teaching to be devoted to the study of real-world problems, with an instrumental use of mathematics rather than to the description of imaginary worlds based on meaningless formalizations.

With the approval of the reform proposals by the Greek government, the Eurozone has returned to calmer waters. But it is only a brief interlude.

I need a history of policy evaluation.

John Smithin argues that we need to rethink the “consensus” with tools old and new.