The neoclassical growth model accords with empirical evidence on convergence if capital is viewed broadly to include human investments, so that diminishing returns to capital set in slowly, and if differences in government policies or other variables create substantial differences in...

A key economic issue is whether poor countries or regions tend to grow faster than rich ones: are there automatic forces that lead to convergence over time in the levels of per capita income and product? The authors use the neoclassical growth model as a framework to study convergence across the...

This paper reexamines the choice of the scale variable in the money-demand function. A variety of evidence suggests that consumer spending is a better scale variable than GNP. Changing the money- demand specification along these lines can profoundly affect the standard Keynesian analysis of a...

Many economists favor higher taxes on energy-related products such as gasoline, while the general public is more skeptical. This essay, based on a talk given at the March 2008 meeting of the Eastern Economic Association, discusses various aspects of this policy debate. It focuses, in particular,...

This paper considers a possible explanation for asymmetric adjustment of nominal prices. The authors present a menu-cost model in which positive trend inflation causes firms' relative prices to decline automatically between price adjustments. In this environment, shocks that raise firms' desired...

The founding of the Federal Reserve System in 1914 led to a substantial change in the behavior of nominal interest rates. The authors examine the timing of this change and the speed with which it was effected. They then use data on the term structure of interest rates to determine how...