第二十章宏观经济那些.docVIP

CHAPTER 20 ADVANCED TOPICS Solutions to the Problems in the Textbook: Conceptual Problems: 1. Some of the aspects of the theories discussed in this chapter complement each other, but there are also major disagreements. The real business cycle theory is an outgrowth of the rational expectations theory and the random walk of GDP theory, while the new Keynesian models respond to the rational expectations theory by showing why prices may still be sticky even under the assumption of rational expectations. In both the real business cycle theory and the new Keynesian models, expectations are formed rationally, but only the real business cycle theory assumes that markets clear very rapidly. These theories therefore disagree on the speed of the price adjustment. They also disagree on the sources of shocks to the economy. The question of whether output follows a random walk has also been an important point of disagreement. If output shocks are important they must come from the supply side and they must have permanent effects. 2. Rational expectations differ from perfect foresight in that expectations are imperfect. While rational people will make efficient use of all information available, they may still make incorrect forecasts. However, when expectations are rational, no systematic errors are made. The best guess for the forecast error term is zero. Under perfect foresight, monetary policy is always neutral, that is, the effect of monetary policy on real output is zero even in the short run. Under rational expectations, monetary policy has a short-run effect on output if the policy change is unanticipated, but it is neutral in the long run. 3. The propagation mechanism is the process by which a disturbance spreads through the economy. The concept of intertemporal substitution of leisure is most often used to describe why people work more in some periods than in others. Assume, for example, that there is a negative shock to technology such that the marginal product