In economics and political science, fiscal policy is the use of government revenue collection and expenditure (spending) to influence the economy. Fiscal policy is often used to stabilize the economy over the course of the business cycle.
The business cycle, also known as the economic cycle or trade cycle, is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend. The length of a business cycle is the period of time containing a single boom and contraction in sequence. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth, and periods of relative stagnation or decline.
Nikolai Dmitriyevich Kondratiev was a Russian economist, who was a proponent of the New Economic Policy (NEP), which promoted small private, free market enterprises in the Soviet Union. He is best known for proposing the theory that Western capitalist economies have long term cycles of boom followed by depression. These business cycles are now called "Kondratiev waves".
Edward Christian Prescott is an American economist. He received the Nobel Memorial Prize in Economics in 2004, sharing the award with Finn E. Kydland, "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles". This research was primarily conducted while both Kydland and Prescott were affiliated with the Graduate School of Industrial Administration at Carnegie Mellon University. According to the IDEAS/RePEc rankings, he is the 19th most widely cited economist in the world today. In August 2014, Prescott was appointed as an Adjunct Distinguished Economic Professor at the Australian National University (ANU) in Canberra, Australia.
In economics, a menu cost is the cost to a firm resulting from changing its prices. The name stems from the cost of restaurants literally printing new menus, but economists use it to refer to the costs of changing nominal prices in general. In this broader definition, menu costs might include updating computer systems, re-tagging items, and hiring consultants to develop new pricing strategies as well as the literal costs of printing menus. More generally, the menu cost can be thought of as resulting from costs of information, decision and implementation resulting in bounded rationality. Because of this expense, firms sometimes do not always change their prices with every change in supply and demand, leading to nominal rigidity. Generally, the effect on the firm of small shifts in price is relatively minor compared to the costs of notifying the public of this new information. Therefore, the firm would rather exist in slight disequilibrium than incur the menu costs.
Alvin Harvey Hansen, often referred to as "the American Keynes", was a professor of economics at Harvard, a widely read author on current economic issues, and an influential advisor to the government who helped create the Council of Economic Advisors and the Social Security system. He is best known for introducing Keynesian economics in the United States in the 1930s.
Laurence Jacob Kotlikoff is an American academic and politician, who is a William Warren Fairfield Professor at Boston University. Apart from being an economics professor at Boston University, he is also a Fellow of the American Academy of Arts and Sciences, a Research Associate of the National Bureau of Economic Research, a Fellow of the Econometric Society, a former Senior Economist, and was formerly on President Ronald Reagan's Council of Economic Advisers. Kotlikoff ran, as he did in the previous elections, as a write-in candidate for President of the United States in the November 8, 2016 election.
In macroeconomics, indivisibility of labor is the idea that labor cannot be used in continuous units but must be purchased from workers in blocks of time, such as eight hours a day or forty hours a week. This model can result in differences in the number of hours worked even though the workers are assumed to be identical: some workers may be unemployed while others are fully employed or even overemployed.
Seasonal adjustment is a statistical method for removing the seasonal component of a time series that exhibits a seasonal pattern. It is usually done when wanting to analyse the trend, and cyclical deviations from trend, of a time series independently of the seasonal components. It is normal to report seasonally adjusted data for unemployment rates to reveal the underlying trends and cycles in labor markets. Many economic phenomena have seasonal cycles, such as agricultural production and consumer consumption, e.g. greater consumption leading up to Christmas. It is necessary to adjust for this component in order to understand what underlying trends are in the economy and so official statistics are often adjusted to remove seasonal components.
Dynamic stochastic general equilibrium modeling is a method in macroeconomics that attempts to explain economic phenomena, such as economic growth and business cycles, and the effects of economic policy, through econometric models based on applied general equilibrium theory and microeconomic principles.
New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Specifically, it emphasizes the importance of rigorous foundations based on microeconomics, especially rational expectations.
In economics, the freshwater school comprises US-based macroeconomists who, in the early 1970s, challenged the prevailing consensus in macroeconomics research. A key element of their approach was the argument that macroeconomics had to be dynamic and based on how individuals and institutions interact in markets and on how they make decisions under uncertainty.
Robert Shimer is an American macroeconomist and labor economist who currently holds the Alvin H. Baum Chair in the Economics Department of the University of Chicago. He was an editor of the Journal of Political Economy from 2004 to 2012. His research focuses on the search and matching approach to labor economics. He is especially known for arguing that the standard labor market matching model predicts fluctuations in the unemployment rate much smaller than those actually observed over the business cycle, an observation which has sometimes been called the Shimer puzzle. His book Labor Markets and Business Cycles was published in 2010 by Princeton University Press, and was recommended by Robert Hall:
Business cycle accounting is an accounting procedure used in macroeconomics to decompose business cycle fluctuations into contributing factors. The procedure was introduced by V. V. Chari, Patrick Kehoe, and Ellen McGrattan but is similar to techniques introduced earlier. The underlying premise of the procedure is that the economy has a long run trajectory which is perturbed by various frictions. These are called wedges and the earliest version of the procedure includes a productivity wedge, a labor wedge, an investment wedge and a government consumption wedge. Business cycle accounting decomposes fluctuations in macroeconomic variables, such as GDP or employment, into fluctuations of each of these wedges.
In macroeconomics, the cost of business cycles is the decrease in social welfare, if any, caused by business cycle fluctuations.
Real business-cycle theory is a class of new classical macroeconomics models in which business-cycle fluctuations to a large extent can be accounted for by real shocks. Unlike other leading theories of the business cycle, RBC theory sees business cycle fluctuations as the efficient response to exogenous changes in the real economic environment. That is, the level of national output necessarily maximizes expected utility, and governments should therefore concentrate on long-run structural policy changes and not intervene through discretionary fiscal or monetary policy designed to actively smooth out economic short-term fluctuations.
The paradox of toil is the economic hypothesis that total employment will shrink if everybody wants to work more when "the short-term nominal interest rate is zero and there are deflationary pressures and output contraction". When wages are pushed down by the simultaneous efforts of everyone in the labor force to work more even at lower wages, with interest rates against the zero bound, demand must fall because the only source of added demand would be added credit to compensate for those lower wages, credit which cannot be made available on any looser terms; this loss of demand leads to loss of jobs.
Martin Stewart Eichenbaum is the Charles Moskos professor of Economics at Northwestern University, and the co-director of the Center for International Economics and Development. His research focuses on macroeconomics, international economics, and monetary theory and policy.
The 1942 United States Senate special election in Minnesota took place on November 3, 1942. The election was held to fill the vacancy in the seat formerly held by Ernest Lundeen for the final two months of Lundeen's unexpired term. Governor Harold Stassen had appointed Joseph H. Ball to fill the seat in 1940, but this appointment was temporary and subject to a special election held in the next general election year thereafter—1942. Ball opted to run for the full six-year term immediately following the end of Lundeen's term, instead of running for election to continue for the remainder of the term. In Ball's stead, the Republican Party of Minnesota nominated Arthur E. Nelson, who, in the special election, defeated both of his challengers—Al Hansen of the Farmer-Labor Party of Minnesota and John E. O'Rourke of the Minnesota Democratic Party.
Ayşe İmrohoroğlu is a Turkish economist who is Professor of Finance and Business Economics at the USC Marshall School of Business.
