The Role of Transfers and Monetary Reform in the Current Economic Slowdown

Abstract

This paper represents an attempt to translate recent developments in macroeconomic theory which are rooted in the microeconomics of imperfect information into current economic diagnoses and policy prescriptions. The theoretical models in question fall under the heading of what Phelps 1 has described as structuralist models in the sense that business cycle phenomena are ascribed fundamentally to real market imperfections, although monetary disturbances may alleviate or exacerbate the macroeconomic impact of these imperfections. Within the broad framework of structuralist explanations, the developments on which we will focus are primarily related to capital market imperfections (and to an extent the broader impact of government policy on the dynamics of firm investment). Finally, within the area of capital market imperfections, the paper will focus on the issue of wealth transfers rather than financial market efficiencies. The final distinction is the one which we wish to emphasize since it is probably the least well-developed aspect of the literature on information-related structural market imperfections.KeywordsMonetary PolicyProductivity GrowthCapital StockMarket ImperfectionNash Equilibrium StrategyThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.