Laura D'Andrea Tyson, Haruhiko Kuroda, Dr. Norbert Walter, Robert C. Pozen, Thomas W. Jones, Alice M. Rivlin, Marshall Carter, Olivia S. Mitchell, Russell J. Cheetham, Yves Guerard, Jan Svejnar, David Hale, Martin S. Feldstein, and Robert D. Hormats
Publication Date:
11-1996
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Social Security has been described as the crown jewel of American federal government programs. It is widely recognized to be the major reason why the poverty rate among the elderly in the United States has fallen in half since 1959 and is lower today than the poverty rate for any other population group as a whole. Fifteen million older Americans are kept out of poverty by Social Security.
Topic:
Economics, Government, and International Political Economy
Dr. LESLIE GELB (President, Council on Foreign Relations): Welcome, ladies and gentlemen. My name is Leslie Gelb. I'm president of the Council on Foreign Relations. And welcome, as well, to our audience from C-SPAN.
Presider: Dr. LESLIE GELB:: (President, Council on Foreign Relations): Pundits and pollsters tell us that the American people aren't paying much attention to foreign policy, and we can all understand that. But I think you will agree with me that if Americans would hear our guests tonight, they'd pull out their earplugs because our guests are two masters of statecraft and two possible Secretaries of State: Jeane Kirkpatrick and Madeleine Albright.
In the architecture of postwar American foreign policy, the twin themes of the Cold War and the national interest emerge as unshakable pillars. In the design of the conference, one session was set aside to explore the practical and political meanings of these themes for minorities. Conferees were asked to consider how Cold War foreign policy priorities intersected with minority concerns. They were also asked to assess whether the declaration made by Hans J. Morgenthau --that "we should have one guiding standard for thought and action, the national interest"--was a useful benchmark. These two points of departure struck the organizers as indispensable to any rethinking of the future.
Textbook approaches to forming asymptotically justified confidence intervals for the spectrum under very general assumptions were developed by the mid-1970s. This paper shows that under the textbook assumptions, the true confidence level for these intervals does not converge to the asymptotic level, and instead is fixed at zero in all sample sizes. The paper explores necessary conditions for solving this problem, most notably showing that under weak conditions, forming valid confidence intervals requires that one limit consideration to a finite-dimensional time series model.
While macroeconometricians continue to dispute the size, timing, and even the existence of effects of monetary policy, political economists often find large effects of political variables and often attribute the effects to manipulation of the Fed. Since the political econometricians often use smaller information sets and less elaborate approaches to identification than do macroeconometricians, their striking results could be the result of simultaneity and omitted variable biases. Alternatively, political whims may provide the instrument for exogenous policy changes that has been the Grail of the policy identification literature. In this paper, we lay out and apply a framework for distinguishing these possibilities. We find almost no support for the hypothesis that political effects on the macroeconomy operate through monetary policy and only weak evidence that political effects are significant at all.
Topic:
Economics, Government, Political Economy, and Politics
We show how the ability o accumulate human capital through formal education and through a learning-by-doing process that occurs on the job affects the dynamic behavior of the human capital stock under a liquidity constrained and a non-constrained case. When there are alternatives to formal schooling in the accumulation of human capital, investing resources in increasing school enrollment rates in low-income countries may not be the most efficient means of increasing the human capital stock. In addition, removal of the liquidity constraints may not be sufficient to escape a development trap.
Topic:
International Relations, Economics, Education, and International Trade and Finance
Some recent studies have suggested constructing a Monetary Conditions Index (or MCI) to serve as an indicator of monetary policy stance. The central banks of Canada, Sweden, and Norway all construct an MCI and (to varying degrees) use it in conducting monetary policy. Empirically, an MCI is calculated as the weighted sum of changes in a short-term interest rate and the exchange rate relative to values in a baseline year. The weights aim to reflect these variables' effects on longer-term focuses of policy — economic activity and inflation. This paper derives analytical and empirical properties of MCIs in an attempt to ascertain their usefulness in monetary policy.
This paper examines the dynamic relationship between changes in the finds rate and nonborrowed reserves within a reduced form framework that allows the relationship to have WO distinct patterns over time. A regime switching model a la Hamilton (1989) is estimated. On average, CPI inflation has been significantly higher in the regime and volatile changes in funds rate. Innovations in money growth are characterized by large associated with a strong anticipated inflation effect in this high inflation regime, and a moderate liquidity effect in the low inflation regime. Furthermore, an identical money innovation generates a much bigger increase in the interest rate during a transition period from the low to high inflation regime than during a steady high inflation period. This accords well with economic intuition since the transition period is when the anticipated inflation effect initially gets incorporated into the interest rate. The converse also holds. That is, the liquidity effect becomes stronger when the economy leaves a high inflation regime period and enters a low inflation regime period.
Topic:
International Relations, Development, Economics, and International Trade and Finance
This paper develops a constant, data-coherent, error correction model for broad money demand (M3) in Greece. This model contributes to a better understanding of the effects of monetary policy in Greece, and of the portfolio consequences of financial innovation in general. The broad monetary aggregate M3 was targeted until recently, and current monetary policy still uses such aggregates as guidelines, yet analysis of this aggregate has been dormant for over a decade.
Topic:
Economics, Government, and International Trade and Finance