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On the Empirical (Ir)Relevance of the Zero Lower Bound Constraint, The Lost Ones: The Opportunities and Outcomes of Non-College Educated Americans Born in the 1960s, Massachusetts Institute of Technology and NBER, University of California, Los Angeles and NBER, Special Deals with Chinese Characteristics, University of California, Berkeley and NBER, Optimal Inflation and the Identification of the Phillips Curve, Southwestern University of Finance and Economics, University of California, San Diego and NBER, The 2020 Martin Feldstein Lecture: Journey Across a Century of Women, Summer Institute 2020 Methods Lectures: Differential Privacy for Economists, The Bulletin on Retirement and Disability, Productivity, Innovation, and Entrepreneurship, Conference on Econometrics and Mathematical Economics, Conference on Research in Income and Wealth, Improving Health Outcomes for an Aging Population, Measuring the Clinical and Economic Outcomes Associated with Delivery Systems, Retirement and Disability Research Center, The Roybal Center for Behavior Change in Health, Training Program in Aging and Health Economics, Transportation Economics in the 21st Century, From Good to Bad Concentration? Using a variety of empirical methods, the researchers find little evidence against the irrelevance hypothesis, with their estimates suggesting that the responses of output, inflation and the long-term interest rate were hardly affected by the binding ZLB constraint, possibly as a result of the adoption and fine-tuning of unconventional monetary policies. Centre For Macroeconomics, London School of Economics and Political Science, London, UK. ISSN 0889-3365 Monograph. NBER Macroeconomics Annual 2020, 34 (1). loading... Silvana Tenreyro ... with Michael McLeay in NBER Macroeconomics Annual 2019, volume 34, Martin S. Eichenbaum, Erik Hurst, and Jonathan A. Parker, editors: May 2019: Optimal Inflation and the Identification of the Phillips Curve with Michael McLeay: w25892: August 2017: Commodity Booms and Busts in Emerging Economies with … From 1960 to 1983, the standard deviation of annual growth rates in real GDP in the United States was 2.7%. 34300 Points . Several academics and practitioners have pointed out that inflation follows a seemingly exogenous statistical process, unrelated to the output gap, leading some to argue that the Phillips curve has weakened or disappeared. 34th Annual Conference on Macroeconomics 2019. NBER Macroeconomics Annual, 34 (1). 34(1), ... Michael McLeay & Silvana Tenreyro, 2019. " 33nd Annual Conference on Macroeconomics 32nd Annual Conference on Macroeconomics 31st Annual Conference on Macroeconomics 30th Annual Conference on Macroeconomics. McLeay, M and S Tenreyro (2019), “Optimal Inflation and the Identification of the Phillips Curve”, NBER Macroeconomics Annual 2019, Vol. McLeay, Michael and Tenreyro, Silvana (2018) Optimal inflation and the identification of the Phillips Curve. Optimal Inflation and the Identification of the Phillips Curve," NBER Chapters, in: NBER Macroeconomics Annual 2019, volume 34, pages 199-255, National Bureau of Economic Research, Inc. Michael McLeay & Silvana Tenreyro, 2018. Bai, Hsieh, and Song argue that China's extraordinary economic growth comes from these special deals. … The extent to which individual responses to household surveys are protected from discovery by outside parties depends... © 2020 National Bureau of Economic Research. 34. The thirty-fourth volume of the NBER Macroeconomics Annual features theoretical and empirical studies of issues in contemporary macroeconomics and a keynote address by James Stock, a member of President Obama's Council of Economic Advisers from 2013 to … Michael McLeay † Silvana Tenreyro ‡ June 2019 Abstract Several academics and practitioners have pointed out that inflation follows a seemingly exogenous statistical process, unrelated to the output gap, leading some to argue that the Phillips curve has weakened or disappeared. In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, and the Bulletin on Health — as well as online conference reports, video lectures, and interviews. citation courtesy of . Economics Letters 112 (2), 220-222, 2011. 33rd Annual Conference on Macroeconomics 32nd Annual Conference on Macroeconomics 31st Annual Conference on Macroeconomics 30th Annual Conference on Macroeconomics. 1 See McLeay, M. and Tenreyro, S. (2019), "Optimal Inflation and the Identification of the Phillips Curve", NBER Macroeconomics Annual 2019, volume 34 and Tenreyro, S. (2018), “Models in macroeconomics”, speech at the University of Surrey, Guildford. This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: NBER Macroeconomics Annual 2002, Volume 17 Volume Author/Editor: Mark Gertler and Kenneth Rogoff, editors Volume Publisher: MIT Press Volume ISBN: 0-262-07246-7 Volume URL: Conference Date: April 5-6, 2002 Publication Date: January 2003 Title: Optimal Currency Areas Author: … In addition to the conference paper, the research was distributed as NBER Working Paper w25931, which may be a more recent version. In this paper we explain why this seemingly exogenous process arises, or, in other words, why it is difficult to empirically identify a Phillips curve, a key building block of the policy framework used by central banks. 199 - 255. Optimal Inflation and the Identification of the Phillips Curve Michael McLeay, Silvana Tenreyro. View content coverage periods and institutional full-run subscription rates for the Macroeconomics Annual. Several academics and practitioners have pointed out that inflation follows a seemingly exogenous statistical process, unrelated to the output gap, leading some to argue that the Phillips curve has weakened or disappeared. The reason is simple: If monetary policy is set with the goal of minimizing welfare losses (measured as the sum of deviations of inflation from its target and output from its potential), subject to a Phillips curve, a central bank will seek to increase inflation when output is below potential. Michael McLeay and Silvana Tenreyro; Michael McLeay. Optimal Inflation and the Identification of the Phillips Curve. 199 - 255. All Rights Reserved. as Christina D. Romer & David H. Romer, 2004. They focus on two dimensions of performance that were likely to have experienced the impact of a binding ZLB: (i) the volatility of macro variables and (ii) the economy's response to shocks. Special Deals with Chinese Characteristics Chong-En Bai, Tsinghua University, Chang-Tai Hsieh, University of Chicago and NBER, Zheng Michael Song, Chinese University of Hong Kong Download Slides Download Paper. 34th Annual Conference on Macroeconomics 2019 More from NBER In addition to working papers , the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter , the NBER Digest , the Bulletin on Retirement and Disability , and the Bulletin on Health — as well as online conference reports , video lectures , and interviews . Comment on ‘Optimal Inflation and the Identification of the Phillips Curve,’ by Michael McLeay and Silvana Tenreyro NBER Macroeconomics Annual 2019, 34, pp. The zero lower bound (ZLB) irrelevance hypothesis implies that the economy's performance is not affected by a binding ZLB constraint. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest. Series: Macroeconomics Annual The thirty-fourth edition of the NBER Macroeconomics Annual features theoretical and empirical studies of issues in contemporary macroeconomics and a keynote address by James Stock, a member of President Obama’s Council of Economic Advisers from 2013 to 2014. ... leading some to argue that the Phillips curve has weakened or disappeared. Comment on ‘Accounting for Factorless Income,’ by Loukas Karabarbounis and Brent Neiman NBER Macroeconomics Annual 2018, 33, pp. NBER macroeconomics annual 17, 301-345, 2002. Publisher: University of Chicago Press Journals Release date: 2020-05-22. M McLeay, A Radia, R Thomas. They show why this result need not imply that the Phillips curve does not hold -- on the contrary, their conceptual framework is built under the assumption that the Phillips curve always holds. NBER Macroeconomics Annual, 34 (1). Powell, J. H. (2019): “Challenges for Monetary Policy”, Speech delivered at the "Challenges for Monetary Policy" symposium, Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming. “Optimal Inflation and the Identification of the Phillips Curve,” with M. McLeay (2020). McLeay and Tenreyro explain why this seemingly exogenous process arises, or, in other words, why it is difficult to empirically identify a Phillips curve, a key building block of the policy framework used by central banks. Michael McLeay and Silvana Tenreyro () . The researchers propose a model consistent with these facts and argue that it accounts for the observed rise in the skill premium with more plausible rates of skill-biased technical change than those required by the canonical model. Their empirical work shows that high-quality goods are more intensive in skilled labor than low-quality goods and that household spending on high-quality goods rises with income. The reason is simple: if monetary policy is set with the goal of minimizing welfare losses (measured as the sum of deviations of inflation from its target and output from its potential), subject to a Phillips curve, a central bank will seek to increase inflation when output is below potential. You may be able to download this chapter for free via the Document Object Identifier. E-Mail: Institutional Affiliation: Bank of England. 1 McLeay and Tenreyro’s argument: the identification problem The Phillips curve is a supply curve. The researchers can reconcile their empirical findings with the predictions of a simple New Keynesian model under the assumption of a shadow interest rate rule. Optimal Inflation and the Identification of the Phillips Curve," NBER Working Papers 25892, National Bureau of Economic Research, Inc. References listed on IDEAS. loading... Silvana Tenreyro ... with Michael McLeay in NBER Macroeconomics Annual 2019, volume 34, Martin S. Eichenbaum, Erik Hurst, and Jonathan A. Parker, editors: May 2019: Optimal Inflation and the Identification of the Phillips Curve with Michael McLeay: w25892: August 2017: Commodity Booms and Busts in Emerging Economies with … In addition to the conference paper, the research was distributed as NBER Working Paper w25839, which may be a more recent version. June 2017: … NBER Macroeconomics Annual 34 (1), 199-255, 2020. HOME PAGE. The interpretation of these trends is controversial. Special Deals with Chinese Characteristics Chong-En Bai, Tsinghua University, Chang-Tai Hsieh, University of Chicago and NBER, Zheng Michael Song, Chinese University of Hong Kong Download Slides Download Paper. Chapter in NBER book NBER Macroeconomics Annual 2019, volume 34 (2020), Martin S. Eichenbaum, Erik Hurst, and Jonathan A. Parker, editors (p. 199 - 255) Conference held April 11-12, 2019 Published in March 2020 by University of Chicago Press CFM Discussion Paper Series (CFM-DP2018-27). Centre For Macroeconomics, London, UK. This targeting rule will impart a negative correlation between inflation and the output gap, blurring the identification of the (positively sloped) Phillips curve. McLeay, Michael and Tenreyro, Silvana (2020) Optimal inflation and the identification of the Phillips curve. It embeds the supply side of the economy, and it captures how in the aggregate, when greater pressure is put on the most important factor of production (labor), firms will want to set higher prices. Michael McLeay Bank of England Threadneedle Street, London EC2R 8AH. 34. Revista de Economía Institucional 17 (33), 333-353, 2015. … 36: 2015: Rethinking financial stability . 12. Since the late 1990's, U.S. industries have become more concentrated and more profitable, while non residential business investment has been weak relative to fundamentals. Juan Carlos Berganza, Fructuoso Borrallo, Pedro del Río, Determinants and Implications of Low Global Inflation Rates, International Macroeconomics in the Wake of the Global Financial Crisis, 10.1007/978-3-319-79075-6_10, (183-216), (2018). 267–279. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. 708: 2011: Volatility and development. April 11-12, 2019 Share. National Bureau of Economic Research Macroeconomics Annual The thirty-fourth volume of the NBER Macroeconomics Annual features theoretical and empirical studies of issues in contemporary macroeconomics and a keynote address by James Stock, a member of President Obama’s Council of Economic Advisers from 2013 to 2014. Optimal Inflation and the Identification of the Phillips Curve, NBER Macroeconomics Annual 2019, volume 34, The 2020 Martin Feldstein Lecture: Journey Across a Century of Women, Summer Institute 2020 Methods Lectures: Differential Privacy for Economists, The Bulletin on Retirement and Disability, Productivity, Innovation, and Entrepreneurship, Conference on Econometrics and Mathematical Economics, Conference on Research in Income and Wealth, Improving Health Outcomes for an Aging Population, Measuring the Clinical and Economic Outcomes Associated with Delivery Systems, Retirement and Disability Research Center, The Roybal Center for Behavior Change in Health, Training Program in Aging and Health Economics, Transportation Economics in the 21st Century, Comment on "Optimal Inflation and the Identification of the Phillips Curve". D Aikman, AG Haldane, M Hinterschweiger, S Kapadia. Competition between local governments limits the predatory effects of special deals. 199 - 255. Chinese local governments wield their enormous political power and administrative capacity to provide "special deals" for favored private firms. M McLeay, S Tenreyro. White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. Search for more articles by this author Abstract; Full Text; PDF; Supplemental Material; Add to favorites; Download Citations; Track Citations; Permissions; Reprints; Share on. The researchers discuss different strategies to circumvent the identification problem and present evidence of a robust Phillips curve in U.S. data. NBER Working Papers and Publications. 02079556018; E-mail: Main Academic Positions Professor, London School of Economics 2012- Associate Professor (Reader), London School of Economics 2008-2012 Assistant Professor (Lecturer), … Welfare losses, measured a one-time asset compensation are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. NBER Macroeconomics Annual 2019. 33rd Annual Conference on Macroeconomics 32nd Annual Conference on Macroeconomics 31st Annual Conference on Macroeconomics 30th Annual Conference on Macroeconomics. McLeay and Tenreyro explain why this seemingly exogenous process arises, or, in other words, why it is difficult to empirically identify a Phillips curve, a key building block of the policy framework used by central banks. Local political leaders do so because they derive personal benefits, either political or monetary, from providing special deals. All Rights Reserved. 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