Welfare Costs of Inflation in a Menu Cost Model
... Third, the presence of idiosyncratic cost and demand shocks leads to additional reasons for price changes, and relative price distortions, even when inflation is low. The observed large movements in prices and market shares of individual varieties at a monthly frequency suggests that this is an impo ...
... Third, the presence of idiosyncratic cost and demand shocks leads to additional reasons for price changes, and relative price distortions, even when inflation is low. The observed large movements in prices and market shares of individual varieties at a monthly frequency suggests that this is an impo ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research Volume Title: The State Of Monetary Economics
... dollar," "Free Enterprise," nor yet "national economic planning(! )" are. The explanation job should be done by someone in the upper reaches of the Treasury, the Council of EcoGovernors, or elsewhere in the government, with enough prestige to speak authoritatively, enough economic competence to talk ...
... dollar," "Free Enterprise," nor yet "national economic planning(! )" are. The explanation job should be done by someone in the upper reaches of the Treasury, the Council of EcoGovernors, or elsewhere in the government, with enough prestige to speak authoritatively, enough economic competence to talk ...
Could A S y m p o S i...
... conomist Marty Feldstein argues that because short-term unemployment is so low, the result could be that “inflation could soon begin to rise year after year without any further decline in overall unemployment.” Others argue that inflation will accelerate for a different reason: because of the increa ...
... conomist Marty Feldstein argues that because short-term unemployment is so low, the result could be that “inflation could soon begin to rise year after year without any further decline in overall unemployment.” Others argue that inflation will accelerate for a different reason: because of the increa ...
the impact of fiscal policy on inflation in nigeria
... explain the link between money and general price levels. The quantity theory (also referred as monetarists view) emphasize the influence of money supply as prime determinants of inflation (Jhinghan, 2008) while the Keynesians emphasize on nonmonetary factors such as government expenditure, spending ...
... explain the link between money and general price levels. The quantity theory (also referred as monetarists view) emphasize the influence of money supply as prime determinants of inflation (Jhinghan, 2008) while the Keynesians emphasize on nonmonetary factors such as government expenditure, spending ...
PDF
... of return on a durable resource such as farmland is invariant to inflation. Empirical evidence supports this theory; the current rate of return on farmland has tended to average approximately 4 percent, whether the inflation rate is high or low. Because real estate accounts for 80 percent of farm as ...
... of return on a durable resource such as farmland is invariant to inflation. Empirical evidence supports this theory; the current rate of return on farmland has tended to average approximately 4 percent, whether the inflation rate is high or low. Because real estate accounts for 80 percent of farm as ...
Inflation. Unit 1. What is inflation? Reading
... 2. What is deflation? 3. What are the types of inflation? 4. How can producers stimulate supply-side inflation? Most people associate inflation with price increases on specific goods and services. The economy is not necessarily experiencing inflation, however, every time the price of a cup of coffee ...
... 2. What is deflation? 3. What are the types of inflation? 4. How can producers stimulate supply-side inflation? Most people associate inflation with price increases on specific goods and services. The economy is not necessarily experiencing inflation, however, every time the price of a cup of coffee ...
ECO 202-03
... money (bank reserve) market. By understanding how these individual aggregated markets work, you will be able to analyze the effects of policy changes and changes in the international economy on a country’s economic performance. The implementation and effectiveness of fiscal and monetary policy are i ...
... money (bank reserve) market. By understanding how these individual aggregated markets work, you will be able to analyze the effects of policy changes and changes in the international economy on a country’s economic performance. The implementation and effectiveness of fiscal and monetary policy are i ...
Economic Review - Leumi International
... concern over Euro area growth prospects. The S&P, meanwhile, had rallied 12% from the early July lows all the way back to 1130 by August 10 but then fell 7.0% to 1050 on the Feds poor economic outlook and the stronger USD. At the recent September 21 FOMC meeting, the Fed communicated for the first t ...
... concern over Euro area growth prospects. The S&P, meanwhile, had rallied 12% from the early July lows all the way back to 1130 by August 10 but then fell 7.0% to 1050 on the Feds poor economic outlook and the stronger USD. At the recent September 21 FOMC meeting, the Fed communicated for the first t ...
Eggertsson and Woodford (2003) - notes
... assumption that interest rate policy is specified in a way that implies that these openmarket operations have no consequences for interest rate policy, either immediately (which is trivial, because it would not be possible for them to lower current interest rates, which is the only effect that would ...
... assumption that interest rate policy is specified in a way that implies that these openmarket operations have no consequences for interest rate policy, either immediately (which is trivial, because it would not be possible for them to lower current interest rates, which is the only effect that would ...
An Introduction to Basic Macroeconomic Markets
... services demanded. Examine the relationship between the general price level and the amount of goods and services supplied in the short-run and longrun. ...
... services demanded. Examine the relationship between the general price level and the amount of goods and services supplied in the short-run and longrun. ...
Student Study Guide for Chapter 12
... 24. Because producers start to encounter bottlenecks in the supply of some of resources as they increase production, prices will rise in some sectors, leading to some aggregate increase in inflation. 25. The ASR curve is flat in the recession range because the existence of unemployed resources produ ...
... 24. Because producers start to encounter bottlenecks in the supply of some of resources as they increase production, prices will rise in some sectors, leading to some aggregate increase in inflation. 25. The ASR curve is flat in the recession range because the existence of unemployed resources produ ...
Chapter 17 Disputes Over Macro Theory and Policy
... 1. The view that business cycles are caused by real factors affecting aggregate supply such as a decline in productivity, which causes a decline in AS. 2. In the real-business cycle theory declines in GDP mean less demand for money. Here, the supply of money is decreased after the demand declines. A ...
... 1. The view that business cycles are caused by real factors affecting aggregate supply such as a decline in productivity, which causes a decline in AS. 2. In the real-business cycle theory declines in GDP mean less demand for money. Here, the supply of money is decreased after the demand declines. A ...
Parkin-Bade Chapter 19
... underutilization of labor. For two reasons: The unemployment rate 1. Excludes people who are so discouraged that they have given up looking for jobs. 2. Measures unemployed people rather than unemployed labor hours. So it does not tells us about the number of part-time workers who want full-time job ...
... underutilization of labor. For two reasons: The unemployment rate 1. Excludes people who are so discouraged that they have given up looking for jobs. 2. Measures unemployed people rather than unemployed labor hours. So it does not tells us about the number of part-time workers who want full-time job ...
Krugman`s Chapter 31 PPT
... increasing the money supply. This increases investment spending and consumer spending, which in turn increases aggregate demand and real GDP in the short run. Contractionary monetary policy raises the interest rate by reducing the money supply. This reduces investment spending and consumer spending, ...
... increasing the money supply. This increases investment spending and consumer spending, which in turn increases aggregate demand and real GDP in the short run. Contractionary monetary policy raises the interest rate by reducing the money supply. This reduces investment spending and consumer spending, ...
The Realities of Modern Hyperinflation
... economies succumbed to hyperinflation. Austria, Germany, Hungary, Poland, and Russia all racked up enormous price increases, with Germany recording an astronomical 3.25 million percent in a single month in 1923. But, since the 1950s, hyperinflation has been confined to the developing world and the t ...
... economies succumbed to hyperinflation. Austria, Germany, Hungary, Poland, and Russia all racked up enormous price increases, with Germany recording an astronomical 3.25 million percent in a single month in 1923. But, since the 1950s, hyperinflation has been confined to the developing world and the t ...
February 2012 Aftershock Newsletter Inflation or Deflation? As
... inflation and rising interest rates will put increasing downward pressure on our falling bubble economy, eventually popping the bubbles and causing a massive economic Aftershock here and around the globe. So far, nothing has happened to change our minds about any of that, especially about future inf ...
... inflation and rising interest rates will put increasing downward pressure on our falling bubble economy, eventually popping the bubbles and causing a massive economic Aftershock here and around the globe. So far, nothing has happened to change our minds about any of that, especially about future inf ...
Mankiw SM Chap04 correct size:chap04.qxd.qxd
... real terms the value of its outstanding debt. In this sense we can say that the government repudiates the debt. This only matters, however, when inflation is unexpected. If inflation is expected, people demand a higher nominal interest rate. Repudiation still occurs (i.e., the real value of the debt ...
... real terms the value of its outstanding debt. In this sense we can say that the government repudiates the debt. This only matters, however, when inflation is unexpected. If inflation is expected, people demand a higher nominal interest rate. Repudiation still occurs (i.e., the real value of the debt ...
Inflation Tutorial
... of a bad economy with an increase in costs is bad for stocks. Also, a company is in the same situation as a normal consumer - the more cash it carries, the more its purchasing power decreases with increases in inflation. The main problem with stocks and inflation is that a company's returns tend to ...
... of a bad economy with an increase in costs is bad for stocks. Also, a company is in the same situation as a normal consumer - the more cash it carries, the more its purchasing power decreases with increases in inflation. The main problem with stocks and inflation is that a company's returns tend to ...
Chapter 6: An Introduction to Macroeconomics Learning objectives
... Suppose that there is only one good in the economy: Dal sweatshirts. Suppose that a Dal sweatshirt cost $40 in 2014 and $50 in 2015, and that 10 sweatshirts were produced and sold in 2014 and 10 sweatshirts were produced and sold in 2015. What is 2014 nominal GDP? $___ ___ = $____. ...
... Suppose that there is only one good in the economy: Dal sweatshirts. Suppose that a Dal sweatshirt cost $40 in 2014 and $50 in 2015, and that 10 sweatshirts were produced and sold in 2014 and 10 sweatshirts were produced and sold in 2015. What is 2014 nominal GDP? $___ ___ = $____. ...
Unit 2—Macroeconomics - Mr. Davidson's IB Economics Page
... When prices in an economy fall, AD extends indicating consumers are willing to buy more at a cheaper price. This is an extension. When prices in an economy increase, AD contracts, indicating consumers are willing to buy less at a higher price. This is a contraction. AD shifts outwards—indicating ...
... When prices in an economy fall, AD extends indicating consumers are willing to buy more at a cheaper price. This is an extension. When prices in an economy increase, AD contracts, indicating consumers are willing to buy less at a higher price. This is a contraction. AD shifts outwards—indicating ...
active learning
... Fisher (1911): The Purchasing Power of Money: Let us begin with the money side. If the number of dollars in a country is 5,000,000, and their velocity of circulation is twenty times per year, then the total amount of money changing hands (for goods) per year is 5,000,000 times twenty, or $100,000,00 ...
... Fisher (1911): The Purchasing Power of Money: Let us begin with the money side. If the number of dollars in a country is 5,000,000, and their velocity of circulation is twenty times per year, then the total amount of money changing hands (for goods) per year is 5,000,000 times twenty, or $100,000,00 ...
Inflation
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.Inflation affects an economy in various ways, both positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.Inflation also has positive effects: Fundamentally, inflation gives everyone an incentive to spend and invest, because if they don't, their money will be worth less in the future. This increase in spending and investment can benefit the economy. However it may also lead to sub-optimal use of resources. Inflation reduces the real burden of debt, both public and private. If you have a fixed-rate mortgage on your house, your salary is likely to increase over time due to wage inflation, but your mortgage payment will stay the same. Over time, your mortgage payment will become a smaller percentage of your earnings, which means that you will have more money to spend. Inflation keeps nominal interest rates above zero, so that central banks can reduce interest rates, when necessary, to stimulate the economy. Inflation reduces unemployment to the extent that unemployment is caused by nominal wage rigidity. When demand for labor falls but nominal wages do not, as typically occurs during a recession, the supply and demand for labor cannot reach equilibrium, and unemployment results. By reducing the real value of a given nominal wage, inflation increases the demand for labor, and therefore reduces unemployment.Economists generally believe that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. However, money supply growth does not necessarily cause inflation. Some economists maintain that under the conditions of a liquidity trap, large monetary injections are like ""pushing on a string"". Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.