NBEP Macroeconomics Annual 1989 National Bureau of Economic Research
NBER Macroeconomics Annual 1989 Editors Olivier Jean Blanchard and Stanley Fischer THE MIT PRESS Cambridge, Massachusetts London, England
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NBER Board of Directors OFFICERS Richard N. Rosett Chairman George T. Conklin, Jr. Vice Chairman Martin Feldstein President Geoffrey Carliner Executive Director Charles A. Walworth Treasurer Sam Parker Director of Finance and Administration DIRECTORS AT LARGE John H. Biggs Martin Feldstein Andrew Brimmer George Hatsopoulos Carl E Christ Franklin A. Lindsay George T. Conklin, Jr. Paul W. McCracken Kathleen B. Cooper Leo Melamed Jean A. Crockett Geoffrey H. Moore George C. Eads Michael H. Moskow Morton Ehrlich James J. O'Leary Robert T. Parry Peter G. Peterson Robert V. Roosa Richard N. Rosett Bert Seidman Eli Shapiro Harold Shapiro Donald S. Wasserman DIRECTORS BY UNIVERSITY APPOINTMENT Charles H. Berry Princeton James L. Pierce California, Berkeley Bill Brainard Yale Andrew Postlewaite Pennsylvania James Duesenberry Harvard Nathan Rosenberg Stanford Ann E Friedlaender James Simler Minnesota Massachusetts Institute of Technology William S. Vickrey Columbia Jonathan Hughes Northwestern Burton A. Weisbrod Wisconsin Saul Hymans Michigan Arnold Zellner Chicago Marjorie B. McElroy Duke DIRECTORS BY APPOINTMENT OF OTHER ORGANIZATIONS Richard Easterlin Ben Laden Economic History Association National Association of Business Bruce Gardner Economists American Agricultural Economics Rudolph A. Oswald Association American Federation of Labor and Robert S. Hamada Congress of Industrial Organizations American Finance Association Douglas D. Purvis Robert C. Holland Canadian Economics Association Committee for Economic Development Dudley Wallace David Kendrick American Statistical Association American Economic Association Charles A. Walworth Eric Kruger American Institute of Certified Public The Conference Board Accountants DIRECTORS EMERITI Moses Abramovitz Emilio G. Collado Solomon Fabricant Frank W. Fetter Thomas D. Flynn Gottfried Haberler George B. Roberts Willard L. Thorp
Contents Editorial: Olivier Jean Blanchard and Stanley Fischer 1 Abstracts 9 TEN YEARS OF MRS. T. 13 Charles Bean and James Symons COMMENTS: William D. Nordhaus 61 Walter Eltis 67 DISCUSSION 71 RECENT TRENDS IN U.S. EARNINGS AND FAMILY INCOMES 73 Frank Levy COMMENT: Lawrence H. Summers 114 DISCUSSION 119 DOES MONETARY POLICY MATTER? A NEW TEST IN THE SPIRIT OF FRIEDMAN AND SCHWARTZ 121 Christina D. Romer and David H. Romer COMMENTS: Anna J. Schwartz 170 Benjamin M. Friedman 177 DISCUSSION 182 CONSUMPTION, INCOME, AND INTEREST RATES: REINTERPRETING THE TIME SERIES EVIDENCE 185 John Y. Campbell and N. Gregory Mankiw COMMENTS: Lawrence J. Christiano 216 Albert Ando 234 DISCUSSION 245
vi - CONTENTS BUILDING BLOCKS OF MARKET CLEARING BUSINESS CYCLE MODELS 247 Kevin M. Murphy, Andrei Shleifer, and Robert W. Vishny COMMENTS: Edward C. Prescott 287 Peter Diamond 291 DISCUSSION 300 RESTRICTIONS ON FINANCIAL INTERMEDIARIES AND IMPLICATIONS FOR AGGREGATE FLUCTUATIONS: CANADA AND THE UNITED STATES 1870-1913 303 Stephen D. Williamson COMMENTS: Mark Gertler 340 Lawrence J. White 345 DISCUSSION 349 NEW INDEXES OF COINCIDENT AND LEADING ECONOMIC INDICATORS 351 James H. Stock and Mark W. Watson COMMENTS: Chris Sims 394 Victor Zarnowitz and Phillip Braun 397 DISCUSSION 408