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A New Monetary and Fiscal Framework for Economic Stability

Introduction. Keynes had two big ideasInvoluntary unemployment (Labor markets don't work well)Confidence matters (animal spirits)Post-war Keynesians twisted these ideasThese lectures provide a new way of thinking about Keynesian ideas. 2. (c) Roger E A Farmer. 8/31/2012. Part 1: Measurement. Dat

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A New Monetary and Fiscal Framework for Economic Stability

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    1. A New Monetary and Fiscal Framework for Economic Stability Taipei, November 2011 Roger E A Farmer Department of Economics UCLA 1 (c) Roger E A Farmer 8/31/2012

    2. Introduction Keynes had two big ideas Involuntary unemployment (Labor markets don’t work well) Confidence matters (animal spirits) Post-war Keynesians twisted these ideas These lectures provide a new way of thinking about Keynesian ideas 2 (c) Roger E A Farmer 8/31/2012

    3. Part 1: Measurement Data and theory are conjoined twins The HP filter distorted the facts Detrending by wage units uncovers new facts 3 (c) Roger E A Farmer 8/31/2012

    4. Part 2: Theory How do we understand these new facts? What does the explanation imply for economic policy? 4 (c) Roger E A Farmer 8/31/2012

    5. Part 3: Monetary Economics What the Fed did What the Fed should do 5 (c) Roger E A Farmer 8/31/2012

    6. What are wage units? 6

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