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Credit Spending And Its Implications for Recent U.S. Economic Growth
Credit Spending And Its Implications for Recent U.S. Economic Growth

... how much income they earn, how much income they expect to earn, and their accumulated wealth. But recent studies have shown that the MPC out of wealth has decreased since Modigliani’s 1963 study. Poterba (2000) found in his research that there may no longer even be a MPC out of wealth. I hypothesiz ...
Paper - CiteSeerX
Paper - CiteSeerX

... is the range that statistical filters target when seeking to distinguish the cyclical from the trend components in GDP. By contrast, the average length of the financial cycle in a sample of seven industrialised countries since the 1960s has been around 16 years. Graph 1, taken from Drehmann et al (2 ...
Money, inflation and interest rates
Money, inflation and interest rates

... gous out of control (hyper-inflations) are economy as money loses value so fast that people stop using money and the entire two components system a)ofthecommercial exchange, that money is supposed to facilitate, breaks down. real return The natural question then is why do governments/ central banks ...
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What was the primary factor encouraging mainstream economists to

... In his 1986 interview with C-L Samuelson indicated that in the period before World War II, “my friends who were not economists regarded me as very conservative” [C-L, 1996, p. 154]. Samuelson graduated the University of Chicago in June 1935 and, as he explained to Colander and Landreth, were it not ...
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Principles of Macroeconomics, Case/Fair/Oster, 10e

... supply curve holds that at any given moment, the economy has a clearly defined capacity, or maximum, output. With planned aggregate expenditure of AE1 and aggregate demand of AD1, equilibrium output is Y1. A shift of planned aggregate expenditure to AE2, corresponding to a shift of the AD curve to A ...
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... exercise systematic or predictable control over real variables (the natural-rate hypothesis). Nevertheless, monetary instability, which Friedman measured using fluctuations in the money stock relative to steady growth, destabilizes real output. These empirical generalizations require reformulation f ...
Monetary Policy in the 2008–2009 Recession
Monetary Policy in the 2008–2009 Recession

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Chapter 26
Chapter 26

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The characteristics of a monetary economy: a Keynes
The characteristics of a monetary economy: a Keynes

... alter the structure of the economic system, or to changes triggered by extra-social factors such as natural conditions, or by extra-economic social factors such as wars, or by consumer tastes; it is an economy in which the production decisions are influenced by consumers’ preferences and in which th ...
Business Cycles and the Bible
Business Cycles and the Bible

... rebalancing of their portfolios away from risky assets toward safer ones will be complemented by a reduction on goods and services spending as an additional way to increase their money holdings. Now if everyone begins selling off assets a fire sale will emerge and cause asset values to plunge. This ...
Grad7
Grad7

... Keynes noted that investment would be induced when the marginal efficiency of capital exceeds the real rate of interest. As such investment occurs, the marginal efficiency of capital decreases, either because of to diminishing returns to capital or because of an increase in the prices of investment ...
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Austrian business cycle theory

The Austrian business cycle theory (ABCT) is an economic theory developed by the Austrian School of economics about how business cycles occur. The theory views business cycles as the consequence of excessive growth in bank credit, due to artificially low interest rates set by a central bank or fractional reserve banks. The Austrian business cycle theory originated in the work of Austrian School economists Ludwig von Mises and Friedrich Hayek. Hayek won the Nobel Prize in economics in 1974 (shared with Gunnar Myrdal) in part for his work on this theory.Proponents believe that a sustained period of low interest rates and excessive credit creation result in a volatile and unstable imbalance between saving and investment. According to the theory, the business cycle unfolds in the following way: Low interest rates tend to stimulate borrowing from the banking system. It is argued that this leads to an increase in capital spending funded by newly issued bank credit. Proponents hold that a credit-sourced boom results in widespread malinvestment. In the theory, a correction or ""credit crunch"" – commonly called a ""recession"" or ""bust"" – occurs when the credit creation has run its course. Then the money supply contracts, causing resources to be reallocated back towards their former uses.The Austrian explanation of the business cycle differs significantly from the mainstream understanding of business cycles and is generally rejected by mainstream economists. Mainstream economists generally do not support Austrian school explanations for business cycles, on both theoretical as well as real-world empirical grounds.
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