Long-run Growth and Short-run Stabilization

Long-run Growth and Short-run Stabilization

Essays in Memory of Albert Ando

Edited by Lawrence R. Klein

There is much confusion in the economics literature on wage determination and the employment–inflation trade-off. Few model builders pay as much careful attention to the definition and meaning of long-run concepts as did Albert Ando. Expanding on years of painstaking work by Ando, the contributors elaborate on the main issues of economic analysis and policies that concerned him.

Chapter 1: The Economics Legacy of Albert Ando

Lawrence R. Klein

Subjects: economics and finance, econometrics

Extract

Lawrence R. Klein For more than three decades I enjoyed and benefited greatly from the collegial relationship that I had with Albert Ando, who joined the Pennsylvania faculty in 1964 and succumbed, after an extremely fruitful career, to the debilitating ravages of leukemia in September 2002. In this period Albert and I shared many discussions and interests in macroeconometric model building, the study of demographic trends in major countries – his ancestral nation Japan, his adopted country the USA and Italy, the country of many of his students and friends – and economic policies for stable expansion of living conditions. This volume, dedicated to the memory of his work, will cover such topics as ● ● ● ● ● Model building – Long-run properties of systems – Aggregation and causal structure – The Phillips curve – Life-cycle behavior of consumers – Monetary transmission for the euro area Demographics of aging – Japan, USA and Europe Economic policy formation, especially for Japan since 1989 Fiscal and monetary policy for the USA Dynamics of financial markets. Albert interacted with many colleagues throughout the world, and took unusually deep interest in the work of his most advanced research students. Some former colleagues and students are contributors to this volume, representing the USA, Japan and Italy. In this chapter, I shall discuss some particular modeling problems on which we interacted – mainly in frequent spontaneous discussions, colleague to colleague. In this introductory analysis, I want to focus on some particular aspects of model building: 1 2 ● ● ● ● Long-run growth and short-run stabilization the role and significance of...

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