Monetary Economics.

• Position: Program and Working Group Meeting

The NBER's Program on Monetary Economics met in Cambridge on November 3. Christopher House and Matthew D. Shapiro, NBER and University of Michigan, organized the meeting, at which these papers were discussed:

Michael Elsby and Gary Solon, University of Michigan and NBER, and Ryan Michaels, University of Michigan, "Reassessing the Ins and Everyone's a Winner"

Discussant: Robert Shimer, University of Chicago and NBER

Olivier Blanchard, MIT and NBER, and Jordi Gali, Universitat Pompeu Fabra and NBER, "A New Keynesian Model with Unemployment"

Discussant: Robert E. Hall, Stanford University and NBER

Monika Piazzesi, University of Chicago and NBER, and Martin Schneider, New York University, "Inflation and the Price of Real Assets"

Discussant: Robert B. Barsky, University of Michigan and NBER

Laura Veldkamp, New York University, and Justin Wolfers, University of Pennsylvania and NBER, "Aggregate Shocks or Aggregate Information? Costly Information and Business Cycle Comovement"

Discussant: Mirko Wiederholt, Northwestern University

Emi Nakamura and Jon Steinsson, Harvard University, "Five Facts About Prices: A Reevaluation of Menu Cost Models"

Discussant: Mark Bils, University of Rochester and NBER

Responding to Shimer's already-influential manuscript "Reassessing the Ins and Outs of Unemployment," Elsby, Solon, and Michaels reconsider the extent to which the increased unemployment during a recession arises from an increase in the number of unemployment spells versus an increase in their duration. Like Shimer, they find an important role for increased duration. But contrary to Shimer's conclusions, they find that even his own methods and data, when viewed in an appropriate metric, reveal an important role for increased inflows to unemployment as well. This finding is further strengthened by their refinements of Shimer's methods of correcting for data problems and by an extension of his approach that enables a more detailed examination of particular components of the inflow to unemployment.

Blanchard and Gall develop a utility based model of fluctuations, with nominal rigidities and unemployment. In doing so, they combine two strands of research: the New Keynesian model, with its focus on nominal rigidities, and the Diamond-Mortensen-Pissarides model, with its focus on labor market frictions and unemployment. Their analysis proceeds in two steps. First, they leave nominal rigidities aside and show that, under a standard utility specification...