The Employment Act of 1946: some history notes
of the 1930s, Congress passed the Employment Act of 1946. Its sponsors believed that earlier failures to deal with massive worldwide unemployment had contributed significantly to the rise of National Socialism, which eventually culminated in World War II. This belief urged the act’s sponsors to find a solution to the problem that had caused “such a great melting away of prosperity in such a short period of time.”’
Beyond the Norm
US federal agency macroeconomic forecasts are generally made in a manner consistent with the unbiasedness-forecast rationality (UFR) hypothesis. While this inference may be valid under normal policy conditions, cognitive biases can make ex ante policy analysis more difficult when macroeconomic circumstances deviate from the norm. I test whether policy forecasting under abnormal macroeconomic conditions generates predictions that exhibit cognitive biases (uncertainty-induced bias). Moreover, I investigate whether government agencies will either overstate (availability bias)or understate (mean anchoring bias) true conditions during both good and bad times. These three behavioral hypotheses are examined by performing simultaneous quantile regression analysis on a pooled dataset on US macroeconomic forecasts by the Office of Management and Budget (OMB), Congressional Budget Office (CBO), and Social Security Administration (SSA) for the 1976- 2002 period. The statistical evidence provides unequivocal support for the uncertainty bias hypothesis as well as strong support for the availability bias hypothesis. Specifically, deviations from frequently occurring (normal) policy conditions are positively related to cognitive bias involving ex ante policy decisions, and such biases tend to overstate abnormal policy conditions. These empirical findings highlight the power of cognitive psychology for explaining departures from classical rationality with respect to government agency forecasting under atypical macroeconomic conditions.
From the World Literature
LIST OF ILLUSTRATIONS ix ACKNOWLEDGMENTS xi INTRODUCTION: Goethe Coins a Phrase 1 PART ONE: CIRCULATION Chapter 1: Gilgamesh's Quest 39 Chapter 2: The Pope's Blowgun 78 Chapter 3: From the Old World to the Whole World 110 PART TWO: TRANSLATION Chapter 4: Love in the Necropolis 147 Chapter 5: The Afterlife of Mechthild von Magdeburg 170 Chapter 6: Kafka Comes Home 187 PART THREE: PRODUCTION Chapter 7: English in the World 209 Chapter 8: Rigoberta Menchu in Print 231 Chapter 9: The Poisoned Book 260 CONCLUSION: World Enough and Time 281 BIBLIOGRAPHY 305 INDEX 319