Mankiw 5/e Chapter 11: Aggregate Demand II
... Why does the Fed target interest rates instead of the money supply? 1) They are easier to measure than the money supply 2) The Fed might believe that LM shocks ...
... Why does the Fed target interest rates instead of the money supply? 1) They are easier to measure than the money supply 2) The Fed might believe that LM shocks ...
Document
... of nominal and real variables Hume and the classical economists suggested that monetary developments affect nominal variables but not real variables. If central bank doubles the money supply, Hume & classical thinkers contend all nominal variables—including prices— will double. all real vari ...
... of nominal and real variables Hume and the classical economists suggested that monetary developments affect nominal variables but not real variables. If central bank doubles the money supply, Hume & classical thinkers contend all nominal variables—including prices— will double. all real vari ...
15.1 the consumer price index
... purchasing power—the nominal interest rate adjusted for the effects of inflation. Real interest rate = Nominal interest rate – Inflation rate ...
... purchasing power—the nominal interest rate adjusted for the effects of inflation. Real interest rate = Nominal interest rate – Inflation rate ...
Chronic Unemployment in the Euro Area: Causes and Cures
... monetary union have given renewed impetus to policy discussions and efforts to reduce joblessness and promote employment growth. The issues involved are wide-ranging: short-term concerns center on the recent slowdown of growth that has reduced the likelihood of a decline in cyclical unemployment in ...
... monetary union have given renewed impetus to policy discussions and efforts to reduce joblessness and promote employment growth. The issues involved are wide-ranging: short-term concerns center on the recent slowdown of growth that has reduced the likelihood of a decline in cyclical unemployment in ...
NBER WORKING PAPER SERIES TECHNOLOGY SHOCKS IN THE NEW KEYNESIAN MODEL
... an increase in productivity lowers each firm’s marginal costs and thereby feeds into its optimal pricing decisions. The New Keynesian model therefore retains the idea that technology shocks can be quite important in shaping the dynamic behavior of key macroeconomic variables. It merely refines and ...
... an increase in productivity lowers each firm’s marginal costs and thereby feeds into its optimal pricing decisions. The New Keynesian model therefore retains the idea that technology shocks can be quite important in shaping the dynamic behavior of key macroeconomic variables. It merely refines and ...
Empirical Evidence for Germany
... aggregate inflation as measured by changes in the average price level is influenced by the skewness of the distribution of relative prices. This debate has been initiated by Ball and Mankiw (1995). They have derived the theoretical link between the skewness of the distribution of relative prices and ...
... aggregate inflation as measured by changes in the average price level is influenced by the skewness of the distribution of relative prices. This debate has been initiated by Ball and Mankiw (1995). They have derived the theoretical link between the skewness of the distribution of relative prices and ...
1 Criticisms of Aggregate Demand and Aggregate Supply: Mankiw`s
... quantity of output determines employment and unemployment (inverse production function), which in turn determines the level of wages (Phillips curve type relation), which (along with the expected price level and the “natural” level of output) determines the price level (cost plus mark-up pricing). ...
... quantity of output determines employment and unemployment (inverse production function), which in turn determines the level of wages (Phillips curve type relation), which (along with the expected price level and the “natural” level of output) determines the price level (cost plus mark-up pricing). ...
How Has Globalization Affected Inflation?
... remained a problem in many major emerging market economies, notably in Latin America, until the early 1990s. Since then, however, progress in stabilizing inflation at single-digit levels has been remarkable. In the emerging market economies of Asia, inflation typically was close to levels observed i ...
... remained a problem in many major emerging market economies, notably in Latin America, until the early 1990s. Since then, however, progress in stabilizing inflation at single-digit levels has been remarkable. In the emerging market economies of Asia, inflation typically was close to levels observed i ...
NBER WORKING PAPELSERIES ON THE TIMING AND EFFICIENCY OF CREATIVE DESTRUCI'ION
... the decentralized bargaining equilibrium. The last subsection asks under what conditions the decentralized economy is efficient. 4A similar point is made by Abraham and Katz (1986) concerning Lilien's finding that employment growth dispersion acro sectors tends to be high when unemployment is high. ...
... the decentralized bargaining equilibrium. The last subsection asks under what conditions the decentralized economy is efficient. 4A similar point is made by Abraham and Katz (1986) concerning Lilien's finding that employment growth dispersion acro sectors tends to be high when unemployment is high. ...
Inflation and economic growth in Rwanda
... implications appeal. However, as suggested by Lin and Ye (2009) and Espinosa et al. (2010), due to the heterogeneous factors pertaining in different countries, it is important to carry out country specific studies in order to relate findings to policy designs with specific cases ; inflation threshol ...
... implications appeal. However, as suggested by Lin and Ye (2009) and Espinosa et al. (2010), due to the heterogeneous factors pertaining in different countries, it is important to carry out country specific studies in order to relate findings to policy designs with specific cases ; inflation threshol ...
NBER WORKING PAPER SERIES ADJUSTING DEPRECIATION IN AN INFLATIONARY
... Several economists have pointed out that these adverse effects of inflation on the value of depreciation allowances could be eliminated completely by changing from historic cost depreciation to a method of indexed depreciation)The simplest such scheme would adjust the value of allowable depreciation ...
... Several economists have pointed out that these adverse effects of inflation on the value of depreciation allowances could be eliminated completely by changing from historic cost depreciation to a method of indexed depreciation)The simplest such scheme would adjust the value of allowable depreciation ...
Working Paper Series
... relationship. There is an increasing agreement that inflation has distributional effects on long-term economic growth if it gets “too high” and thus industrial countries consensus was inflation of 2 percent until the 2007 financial crisis that challenged the norm. Blanchard, DellAricia and Mauro (20 ...
... relationship. There is an increasing agreement that inflation has distributional effects on long-term economic growth if it gets “too high” and thus industrial countries consensus was inflation of 2 percent until the 2007 financial crisis that challenged the norm. Blanchard, DellAricia and Mauro (20 ...
1 Monetary regimes and the co-ordination of wage setting by
... yi = g + α (m − p ) − η ( pi − p ) ...
... yi = g + α (m − p ) − η ( pi − p ) ...
Real-time Taylor rules and the federal funds futures market
... participants, and possibly two.10 First, the Taylor rule uses a measure of the output gap which is computed from a regression of the logarithm of real GDP on a linear trend over the sample period 198492. Simply put, this estimate uses information about future movements in real GDP which the futures ...
... participants, and possibly two.10 First, the Taylor rule uses a measure of the output gap which is computed from a regression of the logarithm of real GDP on a linear trend over the sample period 198492. Simply put, this estimate uses information about future movements in real GDP which the futures ...
This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: Monetary Policy Rules
... model where this intuition is incorrect. In our model economy, macroeconomic equilibrium is inefficient because producers have market power and Okun gaps can arise as a result of price stickiness. However, the monetary authority should nevertheless make the price level the sole objective of monetary ...
... model where this intuition is incorrect. In our model economy, macroeconomic equilibrium is inefficient because producers have market power and Okun gaps can arise as a result of price stickiness. However, the monetary authority should nevertheless make the price level the sole objective of monetary ...
chapter 11
... 26) According to the quantity theory of money: A) when the gap between the growth rate of money supply and the growth rate of real GDP widens, inflation increases. B) when the gap between the growth rate of money supply and the growth rate of real GDP widens, inflation decreases. C) when the gap be ...
... 26) According to the quantity theory of money: A) when the gap between the growth rate of money supply and the growth rate of real GDP widens, inflation increases. B) when the gap between the growth rate of money supply and the growth rate of real GDP widens, inflation decreases. C) when the gap be ...
Macro-economics of balance-sheet problems and the
... wrongly dosing or timing fiscal policy is smaller than under normal conditions. Under normal conditions, the economy will revert to its long-run equilibrium even without fiscal stimulus. Since it is difficult to determine the right amount of stimulus, and because it takes time to implement fiscal po ...
... wrongly dosing or timing fiscal policy is smaller than under normal conditions. Under normal conditions, the economy will revert to its long-run equilibrium even without fiscal stimulus. Since it is difficult to determine the right amount of stimulus, and because it takes time to implement fiscal po ...
NBER WORKING PAPER SERIES Christopher J. Erceg Christopher Gust
... tion of consumption under our benchmark calibration (so that putting a larger weight on the former, as occurs with greater openness, increases the interest-sensitivity of the economy). Overall, although openness does exert some effect on the responses of domestic inflation, output, and real interes ...
... tion of consumption under our benchmark calibration (so that putting a larger weight on the former, as occurs with greater openness, increases the interest-sensitivity of the economy). Overall, although openness does exert some effect on the responses of domestic inflation, output, and real interes ...
Phillips curve
In economics, the Phillips curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result in an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. In 1968, Milton Friedman asserted that the Phillips Curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment. Friedman then correctly predicted that, in the upcoming years after 1968, both inflation and unemployment would increase. The long-run Phillips Curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment. Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of money supply measures such as the MZM (""money zero maturity"") velocity, which is affected by unemployment in the short but not the long term.