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Abstract:
This paper proposes structuring public debt using considerations of robustness rather than strict optimality. Our proposal minimizes, over the infinite future, the conditional uncertainty surrounding public financing requirements. We estimate holding-period returns and market values on nominal and indexed UK government debt for a range of maturities, and derive the desired debt structures, according our proposal, that would be implied by the historical data. Although implications are not precise in all directions, given the historical UK data, our proposal leads to the government strongly favoring index-linked debt over conventionals.

Abstract:
We interpret fluctuations in GNP and unemployment as due to two types of disturbances: disturbances that have a permanent effect on output and disturbances that do not. We interpret the first as supply disturbances, the second as demand disturbances.

We find that demand disturbances have a hump shaped effect on both output and unemployment; the effect peaks after a year and vanishes after two to five years. Up to a scale factor, the dynamic effect on unemployment of demand disturbances is a mirror image of that on output. The effect of supply disturbances on output increases steadily over time, to reach a peak after two years and a plateau after five years. "Favorable" supply disturbances may initially increase unemployment. This is followed by a decline in unemployment, with a slow return over time to its original value.

While this dynamic characterization is fairly sharp, the data are not as specific as to the relative contributions of demand and supply disturbances to output fluctuations. We find that the time series of demand determined output fluctuations has peaks and troughs which coincide with most of the NBER troughs and peaks. But variance decompositions of output at various horizons giving the respective contributions of supply and demand disturbances are not precisely estimated. For instance, at a forecast horizon of four quarters, we find that, under alternative assumptions, the contribution of demand disturbances ranges from 40 to over 95 per cent.

Abstract:
We provide an overview of recent empirical research on patterns of cross-country growth. The new empirical regularities considered differ from earlier ones, e.g., the well-known Kaldor stylized facts. The new research no longer makes production function accounting a central part of the analysis. Instead, attention shifts more directly to questions like, Why do some countries grow faster than others? It is this changed focus that, in our view, has motivated going beyond the neoclassical growth model.

Abstract:
We provide an overview of recent empirical research on patterns of cross-country growth. The new empirical regularities considered differ from earlier ones, e.g., the well known Kaldor stylized facts. The new research no longer makes production function accounting a central part of the analysis. Instead, attention shifts more directly to questions like, Why do some countries grow faster than others? It is this changed focus that, in our view, has motivated going beyond the neoclassical growth model.

Abstract:
Digital goods are bit strings, sequences of 0s and 1s, that have economic value. They are distinguished from other goods by five characteristics: digital goods are non-rival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from a Arrow-Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.

Aspatial, emergence, idea, information, innovation, intellectual asset, Internet, knowledge, Open Source, weightless economy

Abstract:
This Paper attempts to draw lessons for the New Economy from what economists know about technology dissemination and economic growth. It argues that what is most notable about the New Economy is that it is knowledge-driven, not just in the sense that knowledge now assumes increasing importance in production, thereby raising productivity. Instead, it is that consumption occurs increasingly in goods that are like knowledge - computer software, video entertainment, gene sequences, Internet-delivered goods and services - where material physicality matters little. That knowledge is aspatial and nonrival is key. Understanding the effective exchange and dissemination of such knowledge-products will matter more than resolving the so-called productivity paradox.

Aspatial, demand, endogenous growth, endogenous technology, human capital, industrial revolution, infinitely expansible, neoclassical growth, nonrival, productivity paradox, weightless economy

Abstract:
This Paper studies growth and inequality in China and India - two economies that account for a third of the world's population. By modelling growth and inequality as components in a joint stochastic process, the Paper calibrates the impact each has no different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic - growing average incomes dominate all else. The relation between aggregate economic growth and within-country inequality is insignificant for inequality dynamics.

China, distribution dynamics, Gini coefficient, headcount index, India, poverty, world individual income distribution

Abstract:
This Paper develops a model of economic growth and activity locating endogenously on a 3-dimensional featureless global geography. The same economic forces influence simultaneously growth, convergence, and spatial agglomeration and clustering. Economic activity is not concentrated on discrete isolated points but instead a dynamically-fluctuating, smooth spatial distribution. Spatial inequality is a Cass-Koopmans saddlepath, and the global distribution of economic activity converges towards egalitarian growth. Equality is stable but spatial inequality is needed to attain it.

Cluster, continuous space, convergence, distribution dynamics, globalization, growth, knowledge, spatial spillovers, saddlepath dynamics, spatial inequality

Abstract:
Many cultural products have the same non-rival nature as scientific knowledge. They therefore face identical difficulties in creation and dissemination. One traditional view says market failure is endemic - societies tolerate monopolistic inefficiency in intellectual property (IP) protection to incentivize the creation and distribution of intellectual assets. This Paper examines that trade-off in dynamic, representative agent general equilibrium, and characterizes socially efficient creativity. Markets for intellectual assets protected by IP rights can produce too much or too little innovation.

Cultural good, finitely expansible, innovation, intellectual asset, intellectual property, Internet, IP valuation, IPR, knowledge product, MP3, non-rival, software

Abstract:
Much macroeconometric discussion has recently emphasized the economic significance of the size of the permanent component in GNP. Consequently, a large literature has developed that tries to estimate this magnitude measured, essentially, as the spectral density of increments in GNP at frequency zero. This paper shows that unless the permanent component is a random walk this attention has been misplaced: in general, that quantity does not identify the magnitude of the permanent component. Further, by developing bounds on reasonable measures of this magnitude, the paper shows that a random walk specification is biased towards establishing the permanent component as important.

Abstract:
It is often argued that the presence of a unit root in aggregate output implies that there is no "business cycle": the economy does not return to trend following a disturbance. This paper makes this notion precise, but then develops a simple aggregative model where this relation is contradicted. In the model output both has a unit root, and displays repeated short-run fluctuations around a deterministic trend. Some summary statistical evidence is presented that suggests the phenomena described in the paper is not without empirical basis.

Abstract:
This paper explores an econometric estimation technique for dynamic linear models. The method combines the analytics of moving average solutions to dynamic models together with computational advantages of the Whittle likelihood. A hypothesis of interest to international and financial economists is represented in the form of cross-equation restrictions and tested under the technique. This paper employs data on Japanese yen- and U.S. dollar-denominated interest rates and yen/dollar exchange rates to examine the hypothesis of uncovered interest parity under rational expectations.

Abstract:
We review the role of R&D in endogenous growth theory and describe extant empirical research--macro and micro--bearing on R&D as an engine of growth. Taking R&D to be key, while recognizing the significance of economic incentives, emphasizes knowledge as an economic object and, more generally, the economics of intellectual property rights. This paper argues that property rights matter but in subtle counterintuitive ways, not yet fully investigated in research on endogenous growth.

Abstract:
Many alternative measures of core, or underlying, inflation have been proposed that are based on stripping out some unwanted or excessively volatile elements from the headline rate. A potential drawback of such measures is that they are necessarily atheoretic--based largely on purely statistical procedures. This paper proposes an alternative method of measuring core inflation utilizing an explicit economic definition. It defines core inflation as that part of measured inflation that has no medium or long term impact on real output--a notion that is consistent with the vertical long-run Phillips curve. This definition captures the commonly held view that moderate movements in inflation can have no impact on the real economy once financial and wage contracts have been written taking it into account.

Using this definition the paper estimates a measure of core inflation using the VAR identification technique developed by Blanchard and Quah. The estimated measure indicates that core inflation was higher than measured inflation in the early 80s suggesting that measured inflation was depressed by beneficial supply shocks. The opposite effect occurred in the late 80s. Currently, core inflation is above measured inflation.

Abstract:
This paper studies cross-country patterns of economic growth from the viewpoint of income distribution dynamics. Such a perspective raises new empirical and theoretical issues in growth analysis: the profound empirical regularity is an "emerging twin peaks" in the cross-sectional distribution, not simple patterns of convergence or divergence. The theoretical problems raised concern for interaction patterns among sub-groups of economies, not only problems of a single economy's accumulating factor inputs and technology growth.