Jordi Galí
Encyclopedia
Jordi Galí is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
) is a Spanish macroeconomist
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
who is regarded as one of the main figures in New Keynesian macroeconomics
New Keynesian economics
New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of New Classical macroeconomics.Two main assumptions define the New...
today. He is currently the director of the Centre de Recerca en Economia Internacional (CREI, the Center for Research in International Economics) at Universitat Pompeu Fabra and a Research Professor at the Barcelona Graduate School of Economics
Barcelona graduate school of economics
The Barcelona Graduate School of Economics, commonly referred to as Barcelona GSE, is an independent institution of research and graduate education located in Barcelona, in Catalonia, Spain....
. After obtaining his doctorate from MIT in 1989 under the supervision of Olivier Blanchard
Olivier Blanchard
Olivier Jean Blanchard is currently the chief economist at the International Monetary Fund, a post he has held since September 1, 2008. He is also the Class of 1941 Professor of Economics at MIT, though he is currently on leave. Blanchard is one of the most cited economists in the world, according...
, he held faculty positions at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
and New York University
New York University
New York University is a private, nonsectarian research university based in New York City. NYU's main campus is situated in the Greenwich Village section of Manhattan...
before moving to Barcelona.
Research contributions
Galí's research centers on the causes of business cycleBusiness cycle
The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...
s and on optimal monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
, especially through the lens of time series analysis. His studies with Richard Clarida
Richard Clarida
Richard Clarida is an American economist, C. Lowell Harriss Professor of Economics and International Affairs at the School of International and Public Affairs at Columbia University and Global Strategic Advisor for PIMCO. He is notable for his contributions to dynamic stochastic general...
and Mark Gertler suggest that monetary policy in many countries today resembles the Taylor rule
Taylor rule
In economics, a Taylor rule is a monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions. In particular, the rule stipulates that for each one-percent increase in inflation, the...
, whereas the policy makers of the 1970s failed to follow the Taylor rule.
Another theme of Galí's research is how central banks should set interest rates. In some of the simplest New Keynesian
New Keynesian economics
New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of New Classical macroeconomics.Two main assumptions define the New...
macroeconomic models, stabilizing the inflation rate
Inflation rate
In economics, the inflation rate is a measure of inflation, the rate of increase of a price index . It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal.The inflation rate is used to calculate the real interest...
stabilizes the output gap
Output gap
The GDP gap or the output gap is the difference between potential GDP and actual GDP or actual output. The calculation for the output gap is Y*–Y where Y* is actual output and Y is potential output...
too. If this property were roughly true in reality, it would permit central bankers to pursue a simplified Taylor rule
Taylor rule
In economics, a Taylor rule is a monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions. In particular, the rule stipulates that for each one-percent increase in inflation, the...
focused only on inflation stabilization, with no need to consider output growth. Jordi Galí and Olivier Blanchard
Olivier Blanchard
Olivier Jean Blanchard is currently the chief economist at the International Monetary Fund, a post he has held since September 1, 2008. He is also the Class of 1941 Professor of Economics at MIT, though he is currently on leave. Blanchard is one of the most cited economists in the world, according...
have called this property the 'divine coincidence', and have argued that in more realistic models which include additional frictions, it no longer holds. Instead, models with additional frictions (such as frictional unemployment) imply a tradeoff between stabilizing inflation and stabilizing the output gap.
Galí is perhaps best known for providing time series evidence that improvements in labour productivity cause employment to decrease. This finding contradicts the predictions of some well-known real business cycle models promoted by the New Classical macroeconomic school, but is (according to Galí) consistent with many New Keynesian models. However, the statistical methods ('structural vector autoregressions') on which this finding is based remain controversial.
Books
In 2008, Princeton University PressPrinceton University Press
-Further reading:* "". Artforum International, 2005.-External links:* * * * *...
published Galí's monograph Monetary Policy, Inflation, and the Business Cycle. The book provides an introduction to New Keynesian DSGE models, and analyzes the implications of those models for monetary policy
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
. It is written at a level intended for introductory graduate courses in macroeconomics.
Awards
In 2005, Galí received the Yrjö Jahnsson AwardYrjö Jahnsson Award
The Yrjö Jahnsson Award is a biennial award given by the Finnish Yrjö Jahnsson Foundation and the European Economic Association to European economists under the age of 45 "who have made a contribution in theoretical and applied research that is significant to the study of economics in Europe." ...
of the European Economic Association
European Economic Association
The European Economic Association is a professional academic body which links European economists. It was founded in the mid-1980s. Its first annual congress was in 1986 in Vienna, Austria...
in recognition of his work on New Keynesian macroeconomics. He shared the prize with Timothy Besley of the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
. Thomson Reuters lists him among the 'citation laureates' who are likely future winners of the Nobel Prize in Economics.
See also
- Web page of Jordi Galí at CREI
- Barcelona Graduate School of EconomicsBarcelona graduate school of economicsThe Barcelona Graduate School of Economics, commonly referred to as Barcelona GSE, is an independent institution of research and graduate education located in Barcelona, in Catalonia, Spain....