13 Fiscal Policy
... which will cause the aggregate demand curve to shift (leftward, rightward). Real GDP should (fall, rise), and the price level should (fall, rise). 3. If an inflationary gap exists, it can be eliminated if government expenditures (decrease, increase) or if taxes are (decreased, increased). This will ...
... which will cause the aggregate demand curve to shift (leftward, rightward). Real GDP should (fall, rise), and the price level should (fall, rise). 3. If an inflationary gap exists, it can be eliminated if government expenditures (decrease, increase) or if taxes are (decreased, increased). This will ...
Nominal GDP Targeting Rules: Can They Stabilize the Economy?
... For example, sluggish money growth was seen to signal a slowdown in real GDP growth. As a result, easing monetary policy when money growth fell below target helped moderate declines in real GDP growth. The targets for the monetary aggregates were also expected to help policymakers achieve long-term ...
... For example, sluggish money growth was seen to signal a slowdown in real GDP growth. As a result, easing monetary policy when money growth fell below target helped moderate declines in real GDP growth. The targets for the monetary aggregates were also expected to help policymakers achieve long-term ...
foreign exchange risk premium determinants: case of - cerge-ei
... presence of dollarization a signi cant portion of agents' nancial wealth is allocated in terms of foreign currency denominated assets, resulting in an active market with foreign exchange denominated nancial instruments. ...
... presence of dollarization a signi cant portion of agents' nancial wealth is allocated in terms of foreign currency denominated assets, resulting in an active market with foreign exchange denominated nancial instruments. ...
Ch 11
... 4. Falling prices can either increase or decrease equilibrium income. There are two ways in which falling prices can increase income. First, an increase in real money balances shifts the LM curve downward, thereby increasing income. Second, the IS curve shifts to the right because of the Pigou effec ...
... 4. Falling prices can either increase or decrease equilibrium income. There are two ways in which falling prices can increase income. First, an increase in real money balances shifts the LM curve downward, thereby increasing income. Second, the IS curve shifts to the right because of the Pigou effec ...
Figure 7-12 The Price Level - College of Business Administration
... Long run equilibrium is a situation in which labor input is the amount voluntarily supplied and demanded at the equilibrium wage rate. Interpretation of the business cycle. Note that in the short run prices are flexible while the wage rate ...
... Long run equilibrium is a situation in which labor input is the amount voluntarily supplied and demanded at the equilibrium wage rate. Interpretation of the business cycle. Note that in the short run prices are flexible while the wage rate ...
Forecasting Mexico`s Inflation: the Effects of an
... Mexico’s financial system lost worldwide credibility after the 1994–1995 crisis. Recuperating its lost credibility was of major interest since, in Mexico, the central bank’s legal objective is defined as the attainment of price stability (Corbo and Schmidt-Hebbel, 2001). IMF and U.S. Government supp ...
... Mexico’s financial system lost worldwide credibility after the 1994–1995 crisis. Recuperating its lost credibility was of major interest since, in Mexico, the central bank’s legal objective is defined as the attainment of price stability (Corbo and Schmidt-Hebbel, 2001). IMF and U.S. Government supp ...
Deflation and Liberty - Satoshi Nakamoto Institute
... We are told by virtually all the experts on money and finance—the central bankers and most university professors—that the crisis hits us despite the best efforts of the Fed; that money, banking, and financial markets are not meant to be free, because they end up in disarray despite the massive prese ...
... We are told by virtually all the experts on money and finance—the central bankers and most university professors—that the crisis hits us despite the best efforts of the Fed; that money, banking, and financial markets are not meant to be free, because they end up in disarray despite the massive prese ...
2 aggregate supply and demand:a simple
... is Pareto-optimal, given the amounts of factors of production that are available and the optimal decisions by laborers about allocating their time between work and leisure. Although natural output is crucially important for macroeconomic theory and policy, it cannot be directly observed. Policymaker ...
... is Pareto-optimal, given the amounts of factors of production that are available and the optimal decisions by laborers about allocating their time between work and leisure. Although natural output is crucially important for macroeconomic theory and policy, it cannot be directly observed. Policymaker ...
Italian Circuitist Approach
... recalled, the theory would lead to a model of the economy with the double features of a “barter economy” (money has no significant function) and of a “cooperative economy” (agents take production decisions together and share the final product); 2) firms pay money wages in advance. It is evident tha ...
... recalled, the theory would lead to a model of the economy with the double features of a “barter economy” (money has no significant function) and of a “cooperative economy” (agents take production decisions together and share the final product); 2) firms pay money wages in advance. It is evident tha ...
The inflation column
... each February of roughly 0.5% and a trough each crucial: eighteen-month inflation is a combination October of roughly -0.5%. The unexplained com- of one-year inflation (with no seasonality) and sixponent looks not predictable, but random, and is of month inflation (which clearly depends on which six ...
... each February of roughly 0.5% and a trough each crucial: eighteen-month inflation is a combination October of roughly -0.5%. The unexplained com- of one-year inflation (with no seasonality) and sixponent looks not predictable, but random, and is of month inflation (which clearly depends on which six ...
Mankiw 5/e Chapter 11: Aggregate Demand II
... What is the Fed’s policy instrument? 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 are more prevalent than IS shocks. If so, then targeting the interest rate stabilizes income better th ...
... What is the Fed’s policy instrument? 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 are more prevalent than IS shocks. If so, then targeting the interest rate stabilizes income better th ...
PDF
... Finland deviates from the rest in that the weakness of growth appears to be stem from essentially anaemic export performance. Exports have remained flat since the initial very partial recovery in 2009/2010. Since 2010 investments have declined steadily. The decline has concentrated in private invest ...
... Finland deviates from the rest in that the weakness of growth appears to be stem from essentially anaemic export performance. Exports have remained flat since the initial very partial recovery in 2009/2010. Since 2010 investments have declined steadily. The decline has concentrated in private invest ...
course syllabus - Description
... 5. Provide the basics for use of macroeconomics policy by governments in their roles of promoting economic growth, full employment, and economic stability. 6. Relate economic concepts and processes in linking the economics of countries in global economy and explaining economic growth and development ...
... 5. Provide the basics for use of macroeconomics policy by governments in their roles of promoting economic growth, full employment, and economic stability. 6. Relate economic concepts and processes in linking the economics of countries in global economy and explaining economic growth and development ...
BUSINESS CYCLESAND FISCAL POLICY IN AN OPEN ECONOMY
... In view of the differences in the views and practice on fiscal policy activism, it is noteworthy that all OECD- countries have a substantial fiscal activism via the automatic response of public expenses and in particular tax revenues to the business cycle situation. These may work as automatic stabi ...
... In view of the differences in the views and practice on fiscal policy activism, it is noteworthy that all OECD- countries have a substantial fiscal activism via the automatic response of public expenses and in particular tax revenues to the business cycle situation. These may work as automatic stabi ...
Monetary Policy Coordination, Monetary Integration and Other Essays
... Mundell (1961) proposed a simple idea to determine whether it is beneficial for countries in a region to create a common currency area. Suppose that a region composed of two countries, A and B, is hit by an asymmetric shock. The shock is called asymmetric because it increases the quantity demanded f ...
... Mundell (1961) proposed a simple idea to determine whether it is beneficial for countries in a region to create a common currency area. Suppose that a region composed of two countries, A and B, is hit by an asymmetric shock. The shock is called asymmetric because it increases the quantity demanded f ...
Interest rates and fiscal sustainability
... that steady-state long-term real interest rates (again, as set by the marginal efficiency of capital) rise by 50 to 80 basis points (p. 123), which is a range similar to their above reported flow effects. Of course, most obviously recognize that such theoretical results are less certain given that “ ...
... that steady-state long-term real interest rates (again, as set by the marginal efficiency of capital) rise by 50 to 80 basis points (p. 123), which is a range similar to their above reported flow effects. Of course, most obviously recognize that such theoretical results are less certain given that “ ...
Exercise 6 (+additional question) in Mankiw
... total factor productivity between the years? Problem 8.3: Assume an economy which is characterized by perfect competition in the goods and labor market, in which the owners of capital get one-third of national income, and the workers receive two-thirds. Assume a Cobb-Douglas aggregate production fun ...
... total factor productivity between the years? Problem 8.3: Assume an economy which is characterized by perfect competition in the goods and labor market, in which the owners of capital get one-third of national income, and the workers receive two-thirds. Assume a Cobb-Douglas aggregate production fun ...
aggregate supply (AS) curve
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and to maintain predictable exchange rates with other currencies.Monetary economics provides insight into how to craft optimal monetary policy.Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values.Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing.