ASSESSING EMPIRICAL RELATIONSHIPS BETWEEN OUTPUT
... There is an ancient controversy in the macroeconomic thought with regard to the determination of the potential output. In the conventional or mainstream theory, the potential output would be determined only by the real resources dynamics: basically the labor force and technological stocks, and the a ...
... There is an ancient controversy in the macroeconomic thought with regard to the determination of the potential output. In the conventional or mainstream theory, the potential output would be determined only by the real resources dynamics: basically the labor force and technological stocks, and the a ...
Solutions to Assignment 2
... 100. This is what we expect to find, because the government-purchases multiplier is 1/(1 – MPC): because the MPC is 0.75, the government-purchases multiplier is 4. A level of income of 1,600 represents an increase of 300 over the original level of income. The government-purchases multiplier is 1/(1 ...
... 100. This is what we expect to find, because the government-purchases multiplier is 1/(1 – MPC): because the MPC is 0.75, the government-purchases multiplier is 4. A level of income of 1,600 represents an increase of 300 over the original level of income. The government-purchases multiplier is 1/(1 ...
The Science of Monetary Policy
... commitment to a policy rule or by introducing some kind of institutional arrangement that achieves roughly the same end. We address the issue by examining optimal policy for both cases: with and without commitment. Along with expositing traditional results, we also exposit some new results regarding ...
... commitment to a policy rule or by introducing some kind of institutional arrangement that achieves roughly the same end. We address the issue by examining optimal policy for both cases: with and without commitment. Along with expositing traditional results, we also exposit some new results regarding ...
Chapter 26
... a. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. b. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. c. Incorrect. The belief that the ...
... a. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. b. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. c. Incorrect. The belief that the ...
Chapter 26. Fiscal Policy: A Summing Up
... where g is the growth rate of output. Given some initial debt, equation (26.4) implies that the debt-toGDP ratio will grow when there is a primary deficit and when the real interest rate exceeds the growth rate of output. To understand the latter effect, suppose the primary deficit is zero. Then, de ...
... where g is the growth rate of output. Given some initial debt, equation (26.4) implies that the debt-toGDP ratio will grow when there is a primary deficit and when the real interest rate exceeds the growth rate of output. To understand the latter effect, suppose the primary deficit is zero. Then, de ...
When the Bubbles Burst…
... their consumption by 4 dollars • For every 100 dollars of wealth lost in housing, consumers decrease their consumption by 10 dollars • Thus, housing crashes are more difficult than stock market crashes ...
... their consumption by 4 dollars • For every 100 dollars of wealth lost in housing, consumers decrease their consumption by 10 dollars • Thus, housing crashes are more difficult than stock market crashes ...
Menu Costs and Phillips Curves - The University of Chicago Booth
... model’s responses to a one-time impulse of inflation show small and transient effects on real output and employment (figs. 4a and b in Sec. V), in contrast to much larger and more persistent responses of the same model with Calvo pricing. Figure 6 compares before and after distributions of individua ...
... model’s responses to a one-time impulse of inflation show small and transient effects on real output and employment (figs. 4a and b in Sec. V), in contrast to much larger and more persistent responses of the same model with Calvo pricing. Figure 6 compares before and after distributions of individua ...
Chapter 17: Macroeconomic Goals
... Criticisms of the Unemployment Rate Does not include discouraged workers: those who have given up looking for work because they could not find a job. (understates unemployment) Does not account for the "hidden unemployment." "Hidden" unemployment includes those who are working part-time but wish ...
... Criticisms of the Unemployment Rate Does not include discouraged workers: those who have given up looking for work because they could not find a job. (understates unemployment) Does not account for the "hidden unemployment." "Hidden" unemployment includes those who are working part-time but wish ...
As Good As Gold? REP. SUSAN
... they reported, “The average inflation rate for the fiat standard observations is 9.17 percent per year; the average inflation rate for the commodity standard observations is 1.75 percent per year.” This result was not driven by a few extreme cases; in fact, in computing the average rates of inflatio ...
... they reported, “The average inflation rate for the fiat standard observations is 9.17 percent per year; the average inflation rate for the commodity standard observations is 1.75 percent per year.” This result was not driven by a few extreme cases; in fact, in computing the average rates of inflatio ...
lecture notes
... 1. Most decisions concern a change in current conditions; therefore the economic perspective is largely focused on marginal analysis. 2. Each option considered weighs the marginal benefit against the marginal cost. 3. Whether the decision is personal or one made by business or government, the princi ...
... 1. Most decisions concern a change in current conditions; therefore the economic perspective is largely focused on marginal analysis. 2. Each option considered weighs the marginal benefit against the marginal cost. 3. Whether the decision is personal or one made by business or government, the princi ...
CHAPTER 30
... state governments but would work at the federal level, reducing the need for discretionary stimulus packages in the future. V. Conventional wisdom about monetary and fiscal policy. See Figure 30-4. A. Although monetary and fiscal policy are not tools to fine-tune the economy, they can be useful towa ...
... state governments but would work at the federal level, reducing the need for discretionary stimulus packages in the future. V. Conventional wisdom about monetary and fiscal policy. See Figure 30-4. A. Although monetary and fiscal policy are not tools to fine-tune the economy, they can be useful towa ...
Implications of Behavioral Economics for Monetary Policy
... to treat workers in ways they consider unfair—either by cutting nominal wages or by raising nominal wages by less than workers think they should receive, causing inflation to “bottom out” as unemployment rises. For the United States, Clark, Laxton, and Rose (1996) find evidence of nonlinearity, althou ...
... to treat workers in ways they consider unfair—either by cutting nominal wages or by raising nominal wages by less than workers think they should receive, causing inflation to “bottom out” as unemployment rises. For the United States, Clark, Laxton, and Rose (1996) find evidence of nonlinearity, althou ...
Principles of Macroeconomics
... 25 percent. If banks have excess reserves of $10,000, which of the following is the maximum amount of additional money that can be created by the banking system through the lending process? ...
... 25 percent. If banks have excess reserves of $10,000, which of the following is the maximum amount of additional money that can be created by the banking system through the lending process? ...
Chapter 11 All Markets Together. The AS-AD
... The process goes on until output has returned to its natural level. The process can be made faster by using either monetary policy (that is, by increasing the money stock, which leads to a larger decrease in the interest rate) or fiscal policy, which increases demand directly. At the core of the adju ...
... The process goes on until output has returned to its natural level. The process can be made faster by using either monetary policy (that is, by increasing the money stock, which leads to a larger decrease in the interest rate) or fiscal policy, which increases demand directly. At the core of the adju ...
Solution
... 3.9% in 2007. The likely cause of this is a decrease in the cyclical unemployment rate. The increase in real GDP growth indicates that the Japanese economy has expanded during this period. ...
... 3.9% in 2007. The likely cause of this is a decrease in the cyclical unemployment rate. The increase in real GDP growth indicates that the Japanese economy has expanded during this period. ...
Minutes of the Federal Open Market Committee June 17–18, 2014
... the Committee’s various policy tools as normalization proceeds, and many favored maintaining flexibility about the evolution of the normalization process as well as the Committee’s longer-run operating framework. Participants requested additional analysis from the staff on issues related to normaliz ...
... the Committee’s various policy tools as normalization proceeds, and many favored maintaining flexibility about the evolution of the normalization process as well as the Committee’s longer-run operating framework. Participants requested additional analysis from the staff on issues related to normaliz ...
QE in the future: the central bank`s balance sheet in a fiscal crisis
... reserves that pay interest, whereas before the crisis there was mostly currency. The assets included foreign currency and short-term securities issued by the government or backed by it, as before, but now also a large stock of longer-term government securities. These changes were the result of quant ...
... reserves that pay interest, whereas before the crisis there was mostly currency. The assets included foreign currency and short-term securities issued by the government or backed by it, as before, but now also a large stock of longer-term government securities. These changes were the result of quant ...
Macro-economics of balance-sheet problems and the
... The main advantage of micro-founded macro-models is that they are internally consistent and able to handle expectations. This makes them resilient – if they describe economic behaviour correctly – to the Lucas critique (Lucas, 1976); all economic actors correctly internalise all policy changes. A di ...
... The main advantage of micro-founded macro-models is that they are internally consistent and able to handle expectations. This makes them resilient – if they describe economic behaviour correctly – to the Lucas critique (Lucas, 1976); all economic actors correctly internalise all policy changes. A di ...
The Monetary and Fiscal History of Venezuela 1960–2005
... the country had essentially lost all liquid international reserves (after taking into account short term obligations of the country) so there was very little intervention from the central bank and the exchange rate experienced substantial devaluations. From 1994 to 2003, several systems were tried, ...
... the country had essentially lost all liquid international reserves (after taking into account short term obligations of the country) so there was very little intervention from the central bank and the exchange rate experienced substantial devaluations. From 1994 to 2003, several systems were tried, ...
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.