Economic fluctuations and growth.

• Position: Bureau News

Roughly one hundred academic macroeconomists from all over the world gathered in Cambridge on July 21 to attend the summer research meeting of NBER's Program on Economic Fluctuations and Growth. The meeting was organized by Mark Bils, NBER and University of Rochester, and Christopher Sims, NBER and Princeton University. These papers were discussed:

Thomas Cooley and Vincenzo Quadrini, New York University, and Ramon Marimon, NBER and European University Institute, "Aggregate Consequences of Limited Contract Enforceability"

Discussant: Stephen Williamson, University of Iowa

John H. Cochrane, NBER and University of Chicago, "Money as Stock"

Discussant: Bennett T. McCallum, NBER and Carnegie-Mellon University

Stephanie Schmitt-Grohe, Rutgers University, and Martin Uribe, University of Pennsylvania, "Optimal Fiscal and Monetary Policy Under Sticky Prices"

Discussant: V.V. Chari, University of Minnesota

Raquel Fernandez, NBER and New York University, Nezih Guner, Queen's University, and John Knowles, University of Pennsylvania, "Love and Money: A. Theoretical and Empirical Analysis of Household Sorting and Inequality"

Discussant: Michael Kremer, NBER and Harvard University

Muhammet Fatih Guvenen, Carnegie-Mellon University, "Mismeasurement of the Elasticity of Intertemporal Substitution. The Role of Limited Stock Market Participation"

Discussant: Robert E. Hall, NBER and Stanford University

Athanasios Orphanides, Federal Reserve Board, "Monetary Policy Rules, Macroeconomic Stability an Inflation: A View from the Trenches"

Discussant: Eric Leeper; Indiana University

Cooley, Marimon, and Quadrini develop a general equilibrium model in which entrepreneurs finance investment by signing long-term contracts with a financial intermediary. Because of the enforceability problems, financial contracts are constrained to be efficient. After showing that the micro structure of the model captures some of the observed features of the investment policy and dynamics of firms, the authors demonstrate that limited enforceability makes the diffusion of new technologies to the economy sluggish and amplifies their impact on aggregate output.

Nominal government debt is a residual claim to government surpluses. Thus, the value of fiat money, just like the price of stock, can be determined in a completely frictionless economy. Cochrane's main theoretical objection to this fiscal theory of the price level is that it mistreats the government's intertemporal budget...