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http://hdl.handle.net/10419/64416
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| Title: | | New Keynesian endogenous stabilization in a panel of countries  |
| Authors: | | Kiefer, David |
| Issue Date: | | 2008 |
| Series/Report no.: | | Working Paper, University of Utah, Department of Economics 2008-19 |
| Abstract: | | In the new Keynesian model of endogenous stabilization governments have objectives with respect to macroeconomic performance, but are constrained by an augmented Phillips curve. We develop an econometric characterization of the political-economic equilibrium using the Kalman filter to model the unobserved natural rate. Applying this methodology to a panel of North Atlantic countries, we find it consistent with history with a few qualifications. For one, governments are more likely to target growth rates, than output gaps. And, inflation expectations are more likely adaptive, than rational. Also, the error restrictions implied by the standard inflation-productivity shocks formulation needs to be relaxed. |
| Subjects: | | endogenous stabilization objectives expectations Kalman filtering |
| JEL: | | E61 E63 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Department of Economics Working Paper Series, University of Utah
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