Macroeconomic Policy and Public Choice

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1. A Historical Introduction1.1. The Keynesian revolution and the evolution of government’s role -- 1.2. Keynesian orthodoxy -- 1.3. The political consequences of depression proofing -- 1.4. The economic consequences of depression proofing -- 1.5. Schools of thought -- 1.6. Ideology and politics -- 1.7. The market failure rationale for government intervention -- 1.8. Public choice -- 1.9. Conclusion -- 2. Microeconomic Foundations -- 2.1. Introduction -- 2.2. Consumers -- 2.3. Producers -- 2.4. General equilibrium -- 2.5. Pareto efficiency -- 2.6. Social welfare functions -- 2.7. Unemployment and inflation -- 2.8. The government budget and economic policy -- 2.9. Conclusion -- 3. Social Choice -- 3.1. Introduction -- 3.2. The theoretical superiority of majority rule -- 3.3. The impossibility of asking for more -- 3.4. Median voter model -- 3.5. Two dimensional social choice -- 3.6. Probabilistic voting -- 3.7. Political information and party ideology -- 3.8. Conclusion -- 4. Short-Run Macro Models -- 4.1. Introduction -- 4.2. Classical macro from micro foundations -- 4.3. Rationed equilibrium and rigid prices -- 4.4. Non-Walrasian equilibria -- 4.5. A Cobb-Douglas example -- 4.6. Conclusion -- 5. The Phillips Curve and Expectations -- 5.1. Introduction -- 5.2. The natural rate hypothesis -- 5.3. Unemployment and output gaps -- 5.4. Expectations about inflation in the future -- 5.5. Econometric uncertainty -- 5.6. One model of supply: Producer uncertainty -- 5.7. Another model: Predetermined wages -- 5.8. New classical macroeconomics -- 5.9. Conclusion -- 6. Fiscal and Monetary Policy -- 6.1. Introduction -- 6.2. Accounting peculiarities in the US budget -- 6.3. Built-in stabilizers -- 6.4. Balanced and unbalanced budgets -- 6.5. Doubts about fiscal policy effectiveness -- 6.6. The Federal Reserve and the President -- 6.7. Describing the money stock -- 6.8. Causality tests -- 6.9. Spurious regressions -- 6.10. Conclusion -- 7. Keynesian Business Cycles -- 7.1. Introduction -- 7.2. Cycles in a Keynesian model -- 7.3. A linear econometric model -- 7.4. Linear versus nonlinear models -- 7.5. Regression results -- 7.6. Econometric cautions -- 7.7. Dynamic behavior -- 7.8. Conclusion -- 8. Citizen Preferences -- 8.1. Introduction -- 8.2. Presidential popularity -- 8.3. Modeling popularity -- 8.4. Results -- 8.5. Conclusion -- 9. Endogenous Stabilization and Macroeconomic Ideology -- 9.1. Introduction -- 9.2. Endogenous stabilization policy -- 9.3. Ideology -- 9.4. Perceptions and expected utility -- 9.5. Plausible parameter values -- 9.6. The zero-inflation rule and inflation volatility -- 9.7. Voters should prefer conservatives, under certain conditions -- 9.8. Uncertainty about candidate platforms -- 9.9. Conclusion -- 10. Political Business Cycles -- 10.1. Introduction -- 10.2. Election opportunism -- 10.3. Partisan macroeconomics -- 10.4. Backward looking expectations -- 10.5. Forward looking expectations -- 10.6. Observations -- 10.7. Regression tests -- 10.8. Growth rate targets -- 10.9. Conclusion -- 11. Government Debt, Deficit and Social Security -- 11.1. Public debt in the short and long-run -- 11.2. Overlapping generations and efficiency -- 11.3. Public debt -- 11.4. Pay-as-you-go social security -- 11.5. Overlapping generations and equity -- 11.6. Market imperfections in the credit market -- 11.7. The Ricardian equivalence theorem -- 11.8. Illusions, inertia and irrationalities -- 11.9. Economic growth and the bequest constraint -- 11.10. Social security -- 11.11. Conclusion -- Appendix: More overlapping scenarios -- 12. Conclusion -- 12.1. The Keynesian revolution -- 12.2. Foundations -- 12.3. Weak evidence of policy effectiveness -- 12.4. Rational expectations and the Phillips curve -- 12.5. An inherently unstable equilibrium -- 12.6. Stabilization and conservatism -- 12.7. Doubts about rational expectations -- 12.8. Long-run Keynesian outcomes -- References 241 -- Subject Index 249.

10.1007/978-3-642-60564-2 [DOI]

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