DUCTION The classical theory of the price level is sometimes
... If householdscontinue to hold money, and if that money imposesa cost, then money must also yield a benefit. To classicaltheorists, this benefit was the advantagethat comes from being more easily able to exchangecommoditieswith other householdsin the economy; in other words, money is a generally acce ...
... If householdscontinue to hold money, and if that money imposesa cost, then money must also yield a benefit. To classicaltheorists, this benefit was the advantagethat comes from being more easily able to exchangecommoditieswith other householdsin the economy; in other words, money is a generally acce ...
The Nexus of Consumer Credit, Household Debt Service and
... THE NEXUS OF CONSUMER CREDIT, HOUSEHOLD DEBT SERVICE AND CONSUMPTION ...
... THE NEXUS OF CONSUMER CREDIT, HOUSEHOLD DEBT SERVICE AND CONSUMPTION ...
The new classical/real business cycle revolution: a - FEA
... postulates: (a) that agents act in their own self-interest and their behavior is optimal; and (b) that markets clear (Lucas and Sargent, [1979] 1994, p. 15). The ‘discipline’ term is used to convey the view that this is a rule that economists impose upon themselves and which stamps their specific wa ...
... postulates: (a) that agents act in their own self-interest and their behavior is optimal; and (b) that markets clear (Lucas and Sargent, [1979] 1994, p. 15). The ‘discipline’ term is used to convey the view that this is a rule that economists impose upon themselves and which stamps their specific wa ...
The change of paradigm of Milton Friedman
... produced by monetary policy. As a conclusion, Friedman said that inflation was always produced by high public spending and a growth in money supply. So, his recipe was having the Governments spend less and print less. What I found after my long study period for this essay is that Milton Friedman was ...
... produced by monetary policy. As a conclusion, Friedman said that inflation was always produced by high public spending and a growth in money supply. So, his recipe was having the Governments spend less and print less. What I found after my long study period for this essay is that Milton Friedman was ...
chap11
... changing value of output and the changing productivity of the economy • more is produced when technology rises • recessions occur when cost increases make it inefficient to run factories at near capacity ...
... changing value of output and the changing productivity of the economy • more is produced when technology rises • recessions occur when cost increases make it inefficient to run factories at near capacity ...
Monetary Policy and Asset Prices: When Cleaning
... In contrast with conventional models, in this case vt is not an entirely exogenous shock. Policymakers can affect the probability that a bust-induced drop in consumption will occur by varying the first-period nominal interest rate i1 and thus affecting household leverage through the real costs assoc ...
... In contrast with conventional models, in this case vt is not an entirely exogenous shock. Policymakers can affect the probability that a bust-induced drop in consumption will occur by varying the first-period nominal interest rate i1 and thus affecting household leverage through the real costs assoc ...
Reconsidering the business cycle and stabilisation policies in South
... gate economic activity. Burns and Mitchell and others of their era did not have access to reliable time series of gross domestic product as a summary of economic activity, 2 and that is why these pioneers of formal business cycle analysis found it “...necessary to have recourse to other statistical ...
... gate economic activity. Burns and Mitchell and others of their era did not have access to reliable time series of gross domestic product as a summary of economic activity, 2 and that is why these pioneers of formal business cycle analysis found it “...necessary to have recourse to other statistical ...
Monetary Policy and Aggregate Demand
... of the economy? (Answer: High interest rates are associated with an expanding economy and low interest rates are associated with a slumping economy.) 2. Why does this relationship hold? (Answer: Because the Fed raises interest rates to combat inflation when the economy expands and lowers interest ra ...
... of the economy? (Answer: High interest rates are associated with an expanding economy and low interest rates are associated with a slumping economy.) 2. Why does this relationship hold? (Answer: Because the Fed raises interest rates to combat inflation when the economy expands and lowers interest ra ...
Chapter 3 Theories of Rise and Fall, Part 2
... operate, since all factors grow in balance, and where all economies of large-scale production have already been realized” (Samuelson 1975, 453ff). When economies of scale are being realized, then an across-the-board increase in the factors of production will actually result in increasing returns to ...
... operate, since all factors grow in balance, and where all economies of large-scale production have already been realized” (Samuelson 1975, 453ff). When economies of scale are being realized, then an across-the-board increase in the factors of production will actually result in increasing returns to ...
Prof. John H. Munro Department of
... vii) Long-term view of investment: as technological & entrepreneurial changes dictated larger forms of industrial enterprise with heavier capital investments, such investments if occurring together in economy, could be inflationary in the short run, but deflationary in long run. viii) ...
... vii) Long-term view of investment: as technological & entrepreneurial changes dictated larger forms of industrial enterprise with heavier capital investments, such investments if occurring together in economy, could be inflationary in the short run, but deflationary in long run. viii) ...
The Tools of Monetary Policy
... • The net export effect – Impact of expansionary monetary policy • increase the money supply • interest rates fall • value of the local currency falls • net exports increase • the net export effect complements the effectiveness of monetary policy by making greater income growth ...
... • The net export effect – Impact of expansionary monetary policy • increase the money supply • interest rates fall • value of the local currency falls • net exports increase • the net export effect complements the effectiveness of monetary policy by making greater income growth ...
The Application of Circuit- consistent Money to Macroeconomic
... Of course the desert island economy is very different from a modern economy. There is initially only one productive ‘firm’, only one ‘bank’ and no bank deposits, government sector or central bank. Given the limited consumption possibilities on the island, B is happy to accept his ‘interest’ in prod ...
... Of course the desert island economy is very different from a modern economy. There is initially only one productive ‘firm’, only one ‘bank’ and no bank deposits, government sector or central bank. Given the limited consumption possibilities on the island, B is happy to accept his ‘interest’ in prod ...
Ch10
... Can We Ignore Short Run? In 1933, unemployment rate was 25% and GDP was one-third below its 1929 level. Classics: supply creates its own demand. Keynes: aggregate demand fluctuates independent of the supply. Classics: prices adjust fast. Keynes: prices are sticky. ...
... Can We Ignore Short Run? In 1933, unemployment rate was 25% and GDP was one-third below its 1929 level. Classics: supply creates its own demand. Keynes: aggregate demand fluctuates independent of the supply. Classics: prices adjust fast. Keynes: prices are sticky. ...
Keynes` Theory of Money and His Attack on the Classical Model
... neoclassical orthodoxy (the so-called classical model) proceeded along two separate lines, in one of which his theory of money played a crucial role. This paper centers on Keynes' theory of money and his attack on the classical model and, therefore, its role in his effort to achieve the primary theo ...
... neoclassical orthodoxy (the so-called classical model) proceeded along two separate lines, in one of which his theory of money played a crucial role. This paper centers on Keynes' theory of money and his attack on the classical model and, therefore, its role in his effort to achieve the primary theo ...
“Banking, Finance, and Money: a Socio
... where Y* is the output gap, R is the nominal interest rate target, r* is the “natural” or equilibrium real interest rate, p is inflation, and p* is the inflation target (x and z are stochastic shocks). (See Meyer 2001.) Note that the nominal interest rate target is set taking into account the outpu ...
... where Y* is the output gap, R is the nominal interest rate target, r* is the “natural” or equilibrium real interest rate, p is inflation, and p* is the inflation target (x and z are stochastic shocks). (See Meyer 2001.) Note that the nominal interest rate target is set taking into account the outpu ...
Effects of Monetary and Fiscal Policy Power Point
... • They suggest the economy should be left to deal with the short-run fluctuations on its own. ...
... • They suggest the economy should be left to deal with the short-run fluctuations on its own. ...
Keynes’s Monetary Theory: A Different Jnterpretation Allan H. Meltzer
... when the economy was plagued by idle capacity, Keynes held that the capital stock exerted a negative influence on real activity via its depressing effect on rates of return and the inducement to invest. In ignoring this point and arguing that Keynes believed the existing capital stock was too small ...
... when the economy was plagued by idle capacity, Keynes held that the capital stock exerted a negative influence on real activity via its depressing effect on rates of return and the inducement to invest. In ignoring this point and arguing that Keynes believed the existing capital stock was too small ...
I appreciate this opportunity to discuss the paper by I have Henrik
... interest rate (NRI or ρ) and the loan interest rate (r). The natural real interest rate (NRI or ρ) is a pure commodity rate, and it is thus determined by the scarcity of saving (capital).2 As Wicksell explains NRI is “the rate of interest which would be determined by supply and demand if no use were ...
... interest rate (NRI or ρ) and the loan interest rate (r). The natural real interest rate (NRI or ρ) is a pure commodity rate, and it is thus determined by the scarcity of saving (capital).2 As Wicksell explains NRI is “the rate of interest which would be determined by supply and demand if no use were ...
NBER WOR}(ING PAPERS SERIES MONEY, INTEREST AND PRICES Stanley Fischer
... example if each individual's money holdings were increased in the same proportion. Archibald and ...
... example if each individual's money holdings were increased in the same proportion. Archibald and ...
Keynes, Keynesians and Contemporary Monetary Theory and Policy
... Consequently, the General Theory is more than another theory of the business cycle; it is primarily a theory that explains persistent suboptimal performance by a laissez faire economy. Keynes saw a fundamental structural flaw in a laissez faire economy (on or off the gold standard). A laissez ...
... Consequently, the General Theory is more than another theory of the business cycle; it is primarily a theory that explains persistent suboptimal performance by a laissez faire economy. Keynes saw a fundamental structural flaw in a laissez faire economy (on or off the gold standard). A laissez ...
Small open economies in the vast ocean of global high finance
... 1. The table shows the development of each variable compared to its long‐term trend for the five years in the run‐up to and in the aftermath of a financial crisis (starting in 2008). The long‐term trend is estimated for 1870‐2013 using the Hodrick‐Prescott filter with a smoothing parameter equal to ...
... 1. The table shows the development of each variable compared to its long‐term trend for the five years in the run‐up to and in the aftermath of a financial crisis (starting in 2008). The long‐term trend is estimated for 1870‐2013 using the Hodrick‐Prescott filter with a smoothing parameter equal to ...
New classical/real business cycle macroeconomics The anatomy of
... target is the macroeconometric models of the time, all of which had a Keynesian inspiration. Lucas’s claim is that, although they do a fairly good job of forecasting, these models are a failure as far as the assessment of alternative policies is concerned. Their main flaw is their lack of microfound ...
... target is the macroeconometric models of the time, all of which had a Keynesian inspiration. Lucas’s claim is that, although they do a fairly good job of forecasting, these models are a failure as far as the assessment of alternative policies is concerned. Their main flaw is their lack of microfound ...
GOVERNMENT PURCHASES AND N. Gregory Mankiw
... This paper examines the dynamic impact of government purchases in a simple general equilibrium model with both durable and non-durable consumer goods as well as productive capital. The model generates perhaps surprising results. In particular, increases in government purchases are shown to cause red ...
... This paper examines the dynamic impact of government purchases in a simple general equilibrium model with both durable and non-durable consumer goods as well as productive capital. The model generates perhaps surprising results. In particular, increases in government purchases are shown to cause red ...
Neoclassical Synthesis
... and because policy could avoid prolonged disequilibrium anyway, macroeconomic research could progress along two separate lines. One could study long-run movements in output, employment and capital, ignoring business cycle fluctuations as epiphenomena along the path and using the standard tools of equ ...
... and because policy could avoid prolonged disequilibrium anyway, macroeconomic research could progress along two separate lines. One could study long-run movements in output, employment and capital, ignoring business cycle fluctuations as epiphenomena along the path and using the standard tools of equ ...