Thursday, December 18, 2008

Dynamic Macroeconomic Theory or Retaining Valued Employees

Dynamic Macroeconomic Theory

Author: Thomas J Sargent

The tasks of macroeconomics are to interpret observations on economic aggregates in terms of the motivations and constraints of economic agents and to predict the consequences of alternative hypothetical ways of administering government economic policy. General equilibrium models form a convenient context for analyzing such alternative government policies. In the past ten years, the strengths of general equilibrium models and the corresponding deficiencies of Keynesian and monetarist models of the 1960s have induced macroeconomists to begin applying general equilibrium models.

This book describes some general equilibrium models that are dynamic, that have been built to help interpret time-series of observations of economic aggregates and to predict the consequences of alternative government interventions. The first part of the book describes dynamic programming, search theory, and real dynamic capital pricing models. Among the applications are stochastic optimal growth models, matching models, arbitrage pricing theories, and theories of interest rates, stock prices, and options. The remaining parts of the book are devoted to issues in monetary theory; currency-in-utility-function models, cash-in-advance models, Townsend turnpike models, and overlapping generations models are all used to study a set of common issues. By putting these models to work on concrete problems in exercises offered throughout the text, Sargent provides insights into the strengths and weaknesses of these models of money. An appendix on functional analysis shows the unity that underlies the mathematics used in disparate areas of rational expectations economics.

This book on dynamicequilibrium macroeconomics is suitable for graduate-level courses; a companion book, Exercises in Dynamic Macroeconomic Theory, provides answers to the exercises and is also available from Harvard University Press.



Table of Contents:

Introduction


References and Suggested Readings

PART I REAL DYNAMIC MACROECONOMIC MODELS


1. Dynamic Programming


A General Intertemporal Problem


A Recursive Problem


Bellman's Equations


Nonstochastic Examples


The Optimal Linear Regulator Problem


Stochastic Control Problems


Examples of Stochastic Control Problems


The Stochastic Linear Optimal Regulator Problem


Dynamic Programming and Lucas's Critique


Dynamic Games and the Time Inconsistency Phenomenon


Conclusions


Exercises


References and Suggested Readings

2. Search


Nonnegative Random Variables


Stigler's Model of Search


Sequential Search for the Lowest Price


Mean-Preserving Spreads


Increases in Risk and the Reservation Price


Intertemporal Job Search


Waiting Times


Firing


Jovanovic's Matching Model


Conclusions


Exercises


References and Suggested Readings

3. Asset Prices and Consumption


Hall's Random Walk Theory of Consumption


The Random Walk Theory of Stock Prices


Lucas's Model of Asset Prices


Mehra and Prescott's Finite-State Version of Lucas's Model


Asset Pricing More Generally


The Modigliani-Miller Theorem


Government Debt and the Ricardian Proposition


Remarks on Testing and Estimation


Conclusions


Exercises


References and Suggested Readings

PART II MONETARY ECONOMICS AND GOVERNMENTFINANCE


4. Currency in the Utility Function


The Price of Inconvertible Government Currency in Lucas's Tree Model


Issues and Models in Monetary Economics


Government Debt in the Utility Function


Government Currency in the Utility Function


Seignorage and the Optimum Quantity of Currency


A Neutrality Proposition


Conclusions


References and Suggested Readings

5. Cash-in-Advance Models


A One-Country Model


Fisher Equations


Inflation-Indexed Government Debt


Interactions of Monetary and Fiscal Policies


Interest on Reserves


A Two-Country Model


Exchange Rate Indeterminacy


Conclusions


Exercises


References and Suggested Readings

6. Credit and Currency with Long-Lived Agents


The Physical Setup


Optimal Allocations


Competitive Equilibrium


A Digression on the Balances of Trade and Payments


The Ricardian Doctrine about Taxes and Government Debt


The Model with Valued Currency and No Private Debt


An Interventionist Optimal Monetary Equilibrium


Townsend's "Turnpike" Interpretation


Conclusions


Exercises


References and Suggested Readings


7. Credit and Currency with Overlapping Generations


The Overlapping-Generations Model


The Ricardian Doctrine about Taxes and Government Debt Again


A Ricardian Proposition


Currency, Bonds, and Open-Market Operations


Computing Equilibria


Interpretations as Currency Equilibria


Optimality


Four Examples on Inflation and Its Causes


Seignorage and the Laffer Curve


Dynamics of Seignorage


Forced Saving


International Exchange Rates


Conclusions


Exercises


References and Suggested Readings

8. Government Finance in Stochastic Overlapping-Generations Models


The Economy


Some Examples


A General Irrelevance Theorem


Wallace's Modigliani-Miller Theorem for Open-Market Operations


Chamley and Polemarchakis's Neutrality Theorem


Interpretation as a Constant Fiscal Policy


Indexed Government Bonds


A Ricardian Proposition


Further Irrelevance Theorems


Conclusions


Exercises


References and Suggested Readings

Appendix. Functional Analysis for Macroeconomics


Metric Spaces and Operators


First-Order Linear Difference Equations


A Formula of Hansen and Sargent


A Quadratic Optimization Problem in R


A Discounted Quadratic Optimization Problem


Predicting a Geometric Distributed Lead of a Stochastic Process


Discounted Dynamic Programming


A Search Problem


Exercises


References and Suggested Readings

Index

Interesting book: Vegetarian Soups for All Seasons or Japanese Cooking

Retaining Valued Employees

Author: Rodger W Griffeth

How do you keep valuable employees from leaving? With employee turnover at a ten-year high in the tightest labor market in recent memory, human resource professionals face this challenge daily. This book briefly summarizes the current research in the area of employee turnover and provides practical guidelines to implement proven strategies for reducing unwanted turnover. Topics covered include differentiating between functional and dysfunctional turnover, job enrichment, employee selection, orientation programs, compensation practices, easing conflicts between work and home, social integration, and managing exiting employees. Separate chapters are devoted to using employee surveys to predict turnover and diagnose turnover causes and reducing turnover among special groups -- minorities and women. Hands-on interventions are described and illustrated with cases drawn from companies who have been successful in retaining personnel. The appendix includes two sample employee surveys. Human resource professionals, trainers, consultants, students, and researchers will find this a timely and helpful resource.



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