Macro Risks and the Term Structure
... We formulate a model which links macroeconomic factors to the term structure of interest rates in a no-arbitrage framework. We include novel factors in the model that capture the risks associated with aggregate supply and demand shocks for the U.S. economy. We extract these shocks from data on real ...
... We formulate a model which links macroeconomic factors to the term structure of interest rates in a no-arbitrage framework. We include novel factors in the model that capture the risks associated with aggregate supply and demand shocks for the U.S. economy. We extract these shocks from data on real ...
Chapter 21(6): Aggregate Supply and Aggregate Demand
... responds to an increase in aggregate demand: ♦ In the short run, the AD curve shifts rightward and the equilibrium moves along the initial SAS curve. Real GDP increases and the price level rises. ♦ The money wage rate rises to reflect the higher prices, and the SAS curve shifts leftward, decreasing ...
... responds to an increase in aggregate demand: ♦ In the short run, the AD curve shifts rightward and the equilibrium moves along the initial SAS curve. Real GDP increases and the price level rises. ♦ The money wage rate rises to reflect the higher prices, and the SAS curve shifts leftward, decreasing ...
View/Open - UNAM Scholarly Repository
... The pervasive usage of potential output in the policy arena as pointed out by many economists is hardly surprising since potential output constitutes the best composite indicator of the aggregate supply side capacity of an economy and of its scope for sustainable, noninflationary, growth (Chagny, Le ...
... The pervasive usage of potential output in the policy arena as pointed out by many economists is hardly surprising since potential output constitutes the best composite indicator of the aggregate supply side capacity of an economy and of its scope for sustainable, noninflationary, growth (Chagny, Le ...
A Literature Survey with Special Reference to Theories of Inflation
... clearly one-time increases in the price level.1 If equilibrium price level in a domestic market for goods and services rises continuously as a result of continued excess demand conditions in successive time periods, then economists speak in general from demand-pull inflation. In this case ...
... clearly one-time increases in the price level.1 If equilibrium price level in a domestic market for goods and services rises continuously as a result of continued excess demand conditions in successive time periods, then economists speak in general from demand-pull inflation. In this case ...
Good
... microeconomics. We learn from microeconomics that the price of coke and the amount consumed are determined by the market demand and supply of coke. In macroeconomics we do not study an individual market such as coke market, but all markets together. An economy produces and consumes many different go ...
... microeconomics. We learn from microeconomics that the price of coke and the amount consumed are determined by the market demand and supply of coke. In macroeconomics we do not study an individual market such as coke market, but all markets together. An economy produces and consumes many different go ...
the disappointment of expectations
... equilibrium analysis while Keynes’ “method of expectations” is regarded as a device by which this analysis can be used to deal with disequilibrium “in the real world” (p.240). Furthermore, by connecting Keynes’ method of expectations to the method of the Swedish economists based as it was on the dis ...
... equilibrium analysis while Keynes’ “method of expectations” is regarded as a device by which this analysis can be used to deal with disequilibrium “in the real world” (p.240). Furthermore, by connecting Keynes’ method of expectations to the method of the Swedish economists based as it was on the dis ...
The Relationship between Openness and Inflation in NIEs and the G7
... figure 4.1 and figure 4.2. From figure 4.1 it can be noticed that some countries such as Canada, Hong Kong, Italy, Korea, the Philippines, Taiwan, and the United States have a significant upward trend for imports shares. However, some countries like Japan, Singapore, and United Kingdom the imports s ...
... figure 4.1 and figure 4.2. From figure 4.1 it can be noticed that some countries such as Canada, Hong Kong, Italy, Korea, the Philippines, Taiwan, and the United States have a significant upward trend for imports shares. However, some countries like Japan, Singapore, and United Kingdom the imports s ...
APMacroPracFIN
... ____ 41. Refer to Exhibit 10-2. At point B, if we cut tax rates slightly, tax revenues a. increase. b. decrease. c. will not change. d. drop to zero. ____ 42. The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent ...
... ____ 41. Refer to Exhibit 10-2. At point B, if we cut tax rates slightly, tax revenues a. increase. b. decrease. c. will not change. d. drop to zero. ____ 42. The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent ...
What Is New-Keynesian Economics? Robert J. Gordon Journal of Economic Literature
... It is tempting to estimate a regression equation like either line of (4) to determine the degree of price stickiness (a). But four crucial features of the economy-level effects, inertia effects, policy feedback, and supply shocks-are ignored in (4) and may invalidate any interpretation of an estimat ...
... It is tempting to estimate a regression equation like either line of (4) to determine the degree of price stickiness (a). But four crucial features of the economy-level effects, inertia effects, policy feedback, and supply shocks-are ignored in (4) and may invalidate any interpretation of an estimat ...
Causes of Inflation in Turkey: A Literature Survey with
... clearly one-time increases in the price level.1 If equilibrium price level in a domestic market for goods and services rises continuously as a result of continued excess demand conditions in successive time periods, then economists speak in general from demand-pull inflation. In this case ...
... clearly one-time increases in the price level.1 If equilibrium price level in a domestic market for goods and services rises continuously as a result of continued excess demand conditions in successive time periods, then economists speak in general from demand-pull inflation. In this case ...
The Money Supply and the Federal Reserve System
... A) is $400 million. B) is $700 million. C) is $800 million. D) cannot be determined from this information because aggregate demand is not given. Answer: B ...
... A) is $400 million. B) is $700 million. C) is $800 million. D) cannot be determined from this information because aggregate demand is not given. Answer: B ...
Inflation differentials in the euro area during the last decade
... wages and thereby lead to a negative inflation differential relative to other countries, which may last for a relatively long period of time. Similarly, deregulation that increases the degree of competition in the goods and services markets can lower firms’ mark-up of prices over costs and therefore ...
... wages and thereby lead to a negative inflation differential relative to other countries, which may last for a relatively long period of time. Similarly, deregulation that increases the degree of competition in the goods and services markets can lower firms’ mark-up of prices over costs and therefore ...
5 - Narodowy Bank Polski
... many empirical papers analyzing US economy, which simplifies the calibration of the model. Following Romer (1990), we use the endogenous growth framework augmented with the search-matching description of the labor market. It follows closely the Diamond-Mortensen-Pissarides2 framework (the notion of t ...
... many empirical papers analyzing US economy, which simplifies the calibration of the model. Following Romer (1990), we use the endogenous growth framework augmented with the search-matching description of the labor market. It follows closely the Diamond-Mortensen-Pissarides2 framework (the notion of t ...
The relevance of Keynes - Dr. Robert E. Looney Homepage
... it enlarges the scope for speculation and thus makes economic life more volatile. This has been exactly the effect of ‘securitisation’ in the last few years. However, the story is only half told. Investment depends on what Keynes calls the marginal efficiency of capital (MEC)—roughly, the expected r ...
... it enlarges the scope for speculation and thus makes economic life more volatile. This has been exactly the effect of ‘securitisation’ in the last few years. However, the story is only half told. Investment depends on what Keynes calls the marginal efficiency of capital (MEC)—roughly, the expected r ...
Answers to Text Questions and Problems Chapter 22 Answers to
... – Y*, equals 8500 - 9000 = -500. As a percentage of full employment, the gap is 500/9000 = -5.6%. By Okun’s Law, cyclical unemployment is minus one times one-half of the output gap, or 2.8%. Since the natural rate is 4%, the actual unemployment rate is 4% + 2.8% = 6.8%. 5. Calculating the effects of ...
... – Y*, equals 8500 - 9000 = -500. As a percentage of full employment, the gap is 500/9000 = -5.6%. By Okun’s Law, cyclical unemployment is minus one times one-half of the output gap, or 2.8%. Since the natural rate is 4%, the actual unemployment rate is 4% + 2.8% = 6.8%. 5. Calculating the effects of ...
Aggregate Demand and Aggregate Supply
... the aggregate demand for goods and services if nothing else changes. Although the aggregate demand curve and the demand curves for individual goods and services are all downward-sloping, there are differences between these two types of curves. For example, the quantity of wheat that is demanded depe ...
... the aggregate demand for goods and services if nothing else changes. Although the aggregate demand curve and the demand curves for individual goods and services are all downward-sloping, there are differences between these two types of curves. For example, the quantity of wheat that is demanded depe ...
Chapter 24: Aggregate Demand, Aggregate Supply, and Inflation
... Deriving the Aggregate Demand Curve • To derive the aggregate demand curve, we examine what happens to aggregate output (income) (Y) when the price level (P) changes, assuming no changes in government spending (G), net taxes (T), or the ...
... Deriving the Aggregate Demand Curve • To derive the aggregate demand curve, we examine what happens to aggregate output (income) (Y) when the price level (P) changes, assuming no changes in government spending (G), net taxes (T), or the ...
The New IS-LM Model: Language, Logic, and Limits
... serially uncorrelated. Third, many economists—including central bankers— remained convinced that the systematic choices of the monetary authority were important for the character of economic fluctuations and thus rejected the model due to the “policy irrelevance” implication. In recent years, there ...
... serially uncorrelated. Third, many economists—including central bankers— remained convinced that the systematic choices of the monetary authority were important for the character of economic fluctuations and thus rejected the model due to the “policy irrelevance” implication. In recent years, there ...
Real wages, inflation and labour productivity in Australia
... manufacturing sub-sectors over the period 1980-1996 and found that profit margins (markups) are positively and significantly affected by real wage costs and price inflation; similar conclusions were obtained for Turkey by Blanchard (1985) and Metin-Ozcan et al. (2002). Empirical concerns In relation ...
... manufacturing sub-sectors over the period 1980-1996 and found that profit margins (markups) are positively and significantly affected by real wage costs and price inflation; similar conclusions were obtained for Turkey by Blanchard (1985) and Metin-Ozcan et al. (2002). Empirical concerns In relation ...
A Classical View of the Business Cycle
... “geometrical” probability curve … seems best suited to show the effect of P’ [changes in the price level] on unemployment or employment. (Fisher 1926, pp.789-790) Fisher now had found more evidence that variations in real activity were related to inflation but, as in his previous work, did not expla ...
... “geometrical” probability curve … seems best suited to show the effect of P’ [changes in the price level] on unemployment or employment. (Fisher 1926, pp.789-790) Fisher now had found more evidence that variations in real activity were related to inflation but, as in his previous work, did not expla ...
FISCAL POLICY IN SWEDEN
... The third question deals with a further aspect of fiscal policy, how it affects aggregate demand. The development of the structural balance is often taken as point of departure for this. Here we analyse the effects of fiscal policy on aggregated demand, and thus its effect on inflation. In this cont ...
... The third question deals with a further aspect of fiscal policy, how it affects aggregate demand. The development of the structural balance is often taken as point of departure for this. Here we analyse the effects of fiscal policy on aggregated demand, and thus its effect on inflation. In this cont ...
NBER WORKING PAPER SERIES WHY DOES MONEY AFFECT OUTPUT? A SURVEY
... margins as output increased, was not resolved (see Nordhaus [1972] for a critical analysis of those price equations). In the wage equation, letting the data decide whether the coefficient on inflation was equal to one was in contrast with, for example, the sophisticated derivation of the appropriate ...
... margins as output increased, was not resolved (see Nordhaus [1972] for a critical analysis of those price equations). In the wage equation, letting the data decide whether the coefficient on inflation was equal to one was in contrast with, for example, the sophisticated derivation of the appropriate ...
Full employment
Full employment, in macroeconomics, is the level of employment rates where there is no cyclical or deficient-demand unemployment. It is defined by the majority of mainstream economists as being an acceptable level of unemployment somewhere above 0%. The discrepancy from 0% arises due to non-cyclical types of unemployment, such as frictional unemployment (there will always be people who have quit or have lost a seasonal job and are in the process of getting a new job) and structural unemployment (mismatch between worker skills and job requirements). Unemployment above 0% is seen as necessary to control inflation in capitalist economies, to keep inflation from accelerating, i.e., from rising from year to year. This view is based on a theory centering on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); in the current era, the majority of mainstream economists mean NAIRU when speaking of ""full"" employment. The NAIRU has also been described by Milton Friedman, among others, as the ""natural"" rate of unemployment. Having many names, it has also been called the structural unemployment rate.The 20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and their political biases. For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s. Recently, economists have emphasized the idea that full employment represents a ""range"" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the ""full-employment unemployment rate"" of 4 to 6.4%. This is the estimated unemployment rate at full employment, plus & minus the standard error of the estimate.The concept of full employment of labor corresponds to the concept of potential output or potential real GDP and the long run aggregate supply (LRAS) curve. In neoclassical macroeconomics, the highest sustainable level of aggregate real GDP or ""potential"" is seen as corresponding to a vertical LRAS curve: any increase in the demand for real GDP can only lead to rising prices in the long run, while any increase in output is temporary.