NBER WORKING PAPER SERIES THE CONQUEST OF SOUTH AMERICAN INFLATION Thomas Sargent
... to the higher π1∗ , but the higher fixed point π2∗ is lower and thus it will be easier for beliefs to escape. To make this explanation fit together, Marcet and Nicolini (2003) supplemented the basic model of Marcet and Sargent (1989b) with a story about mechanical reforms that end an escape episode ...
... to the higher π1∗ , but the higher fixed point π2∗ is lower and thus it will be easier for beliefs to escape. To make this explanation fit together, Marcet and Nicolini (2003) supplemented the basic model of Marcet and Sargent (1989b) with a story about mechanical reforms that end an escape episode ...
Real GDP and the Price Level in the Long Run
... (full, incomplete) information, and full adjustment to changes in the price level can occur. 3. The aggregate demand curve relates planned purchase rates of all goods and services to various ______________________________. The aggregate supply curve relates planned rates of total production for the ...
... (full, incomplete) information, and full adjustment to changes in the price level can occur. 3. The aggregate demand curve relates planned purchase rates of all goods and services to various ______________________________. The aggregate supply curve relates planned rates of total production for the ...
Aggregate Demand
... fiscal policy and monetary policy is required. The term “Keynesian” derives from the name of one of the twentieth century’s most famous economists, John ...
... fiscal policy and monetary policy is required. The term “Keynesian” derives from the name of one of the twentieth century’s most famous economists, John ...
34 The Influence of Monetary and Fiscal Policy on Aggregate Demand
... Whether the final shift in the aggregate-demand curve is greater than or less than the original change in government spending depends on which is larger: the multiplier effect or the crowding-out effect. The other half of fiscal policy is taxation. A reduction in taxes increases households’ take-hom ...
... Whether the final shift in the aggregate-demand curve is greater than or less than the original change in government spending depends on which is larger: the multiplier effect or the crowding-out effect. The other half of fiscal policy is taxation. A reduction in taxes increases households’ take-hom ...
determining the risk free rate for regulated companies
... To summarise, the use of an interest rate of longer term than the regulatory period for setting output prices leads to two problems in a presence of a non-flat term structure. If the non-flat term structure is due to a liquidity premium, and therefore unpredictability in future spot rates, the use o ...
... To summarise, the use of an interest rate of longer term than the regulatory period for setting output prices leads to two problems in a presence of a non-flat term structure. If the non-flat term structure is due to a liquidity premium, and therefore unpredictability in future spot rates, the use o ...
the assessment of some macroeconomic forecasts for spain using
... measures. Scale-dependent measures, measures based on percentage errors, measures based on relative errors and relative measures. Scaled errors solve the disadvantages of relative measures and measures based on relative errors, the mean absolute scaled error being an indicator proposed by the author ...
... measures. Scale-dependent measures, measures based on percentage errors, measures based on relative errors and relative measures. Scaled errors solve the disadvantages of relative measures and measures based on relative errors, the mean absolute scaled error being an indicator proposed by the author ...
Aggregate Demand and Aggregate Supply
... • A number of reasons explain why oil price shocks have had less of an impact: • 1. Oil prices are less significant in the U.S. economy today than in the 1970s. • 2. The amount of gas and oil used to produce each dollar of output has declined by about 50 percent since 1970. (from 14,000 BTUs to 7,00 ...
... • A number of reasons explain why oil price shocks have had less of an impact: • 1. Oil prices are less significant in the U.S. economy today than in the 1970s. • 2. The amount of gas and oil used to produce each dollar of output has declined by about 50 percent since 1970. (from 14,000 BTUs to 7,00 ...
Chapter 7 PowerPoint Presentation
... © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. ...
... © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. ...
NBER WORKING PAPER SERIES OPTIMAL SIMPLE AND IMPLEMENTABLE MONETARY AND FISCAL RULES
... Exceptions are Khan, King, and Wolman (2003) and Schmitt-Grohé and Uribe (2004). We note that an accurate first-order approximation to the utility function around the non-stochastic steady state can be obtained using a linear approximation to the equilibrium conditions. But such an approximation is ...
... Exceptions are Khan, King, and Wolman (2003) and Schmitt-Grohé and Uribe (2004). We note that an accurate first-order approximation to the utility function around the non-stochastic steady state can be obtained using a linear approximation to the equilibrium conditions. But such an approximation is ...
Inflation dynamics, marginal cost, and the output gap:
... rationalize a disturbance (or “cost-push shock”) term in empirical NKPCs, that is the basis for the existence for a trade-off between price inflation and output gap variability. We will argue that such a shock term can be rationalized even in the absence of labor market rigidities, once one consider ...
... rationalize a disturbance (or “cost-push shock”) term in empirical NKPCs, that is the basis for the existence for a trade-off between price inflation and output gap variability. We will argue that such a shock term can be rationalized even in the absence of labor market rigidities, once one consider ...
FRBSF L CONOMIC
... inflation falls. Moreover, the decline in short-term interest rates is consistent with the easing of the stance of monetary policy that would prevail if policymakers try to mitigate the negative economic effects of increased uncertainty. These effects of uncertainty are not unique to the United Stat ...
... inflation falls. Moreover, the decline in short-term interest rates is consistent with the easing of the stance of monetary policy that would prevail if policymakers try to mitigate the negative economic effects of increased uncertainty. These effects of uncertainty are not unique to the United Stat ...
answer key - U of L Personal Web Sites
... 36. Which of the following policies is most likely to promote per capita growth? A) An income tax. C) A policy that discourages foreign investment. B) A cap on interest rates for saving accounts. D) A consumption tax. Ans: D 37. Expenditures that would exist at an income level of zero are called A) ...
... 36. Which of the following policies is most likely to promote per capita growth? A) An income tax. C) A policy that discourages foreign investment. B) A cap on interest rates for saving accounts. D) A consumption tax. Ans: D 37. Expenditures that would exist at an income level of zero are called A) ...
Zimbabwe Monetary Policy 1998-2012: From Hyperinflation to
... Zimbabwe’s 2008 hyperinflation is said to be the second highest in recorded history, and provides an interesting case study of policy failure. We explore possible motivating factors behind the hyperinflation to understand why it happened and persisted for so long, and who benefited from it. The pape ...
... Zimbabwe’s 2008 hyperinflation is said to be the second highest in recorded history, and provides an interesting case study of policy failure. We explore possible motivating factors behind the hyperinflation to understand why it happened and persisted for so long, and who benefited from it. The pape ...
Chapter 20 - Aggregate demand and aggregate supply
... As the economy becomes better able to produce goods and services over time, primarily because of technological progress, the long-run aggregate-supply curve shifts to the right. At the same time, as the Fed increases the money supply, the aggregate-demand curve also shifts to the right. In this figu ...
... As the economy becomes better able to produce goods and services over time, primarily because of technological progress, the long-run aggregate-supply curve shifts to the right. At the same time, as the Fed increases the money supply, the aggregate-demand curve also shifts to the right. In this figu ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... lag behind the short-term rates and have much lower conformity and much smaller amplitudes. The relative movements in both short-term market rates and bond yields increased significantly in the recent past compared with their historical averages. Near cyclical peaks, short rates tend to come close t ...
... lag behind the short-term rates and have much lower conformity and much smaller amplitudes. The relative movements in both short-term market rates and bond yields increased significantly in the recent past compared with their historical averages. Near cyclical peaks, short rates tend to come close t ...
The estimation of money demand in the Slovak Republic
... that the short-run part of the equation includes the variable representing alternative assets from 2004, or that the long-run equation does not include this figure at all (shortness of the time series). The absence of this variable may also be a cause of the relatively high long-run elasticity of lo ...
... that the short-run part of the equation includes the variable representing alternative assets from 2004, or that the long-run equation does not include this figure at all (shortness of the time series). The absence of this variable may also be a cause of the relatively high long-run elasticity of lo ...
Chapter 1: Introduction
... Yet people fear a typical recession much more than they value an extra four years' worth of economic growth. The memory of the 1982 recession has substantially altered Americans’ perceptions of how the economy works, how much they dare risk in the search for higher wages, and how confident they can ...
... Yet people fear a typical recession much more than they value an extra four years' worth of economic growth. The memory of the 1982 recession has substantially altered Americans’ perceptions of how the economy works, how much they dare risk in the search for higher wages, and how confident they can ...
DOWNLOAD PAPER
... government spending spread and the quadratic adjustment cost itself, has an effect on the trade-off between inflation and output gap stabilization policy problem through direct and indirect channels. In the direct channel, the higher value of the adjustment cost steepens the slope of New Keynesian ...
... government spending spread and the quadratic adjustment cost itself, has an effect on the trade-off between inflation and output gap stabilization policy problem through direct and indirect channels. In the direct channel, the higher value of the adjustment cost steepens the slope of New Keynesian ...
modules 31 to 35
... slow growing in the LR. Therefore, slow growth of the money supply would result into increased nominal GDP. ...
... slow growing in the LR. Therefore, slow growth of the money supply would result into increased nominal GDP. ...
Chapter 14
... labour, capital, natural resources, and technology; changes in any of these will shift the long-run aggregate supply curve. ...
... labour, capital, natural resources, and technology; changes in any of these will shift the long-run aggregate supply curve. ...
Monetary Theory II
... After Congress passed the stimulus program, the unemployment rate was still much higher than the predicted peak 8%, and it went as high as 10.0% in 2009. One reason for the faulty forecasts was that Okun’s law sharply underestimated the unemployment rate. Rising labor productivity may be an explanat ...
... After Congress passed the stimulus program, the unemployment rate was still much higher than the predicted peak 8%, and it went as high as 10.0% in 2009. One reason for the faulty forecasts was that Okun’s law sharply underestimated the unemployment rate. Rising labor productivity may be an explanat ...
NBER WORKING PAPER SERIES IS-LM AND MONETARISM Michael D. Bordo Anna J. Schwartz
... A third issue is that Keynes asserts that under conditions of underemployment, when interest rates are positive but low, a liquidity trap exists such that the demand for money becomes infinitely elastic. Changes in the real supply of money then have no effect at all. Of all the commentators on Fried ...
... A third issue is that Keynes asserts that under conditions of underemployment, when interest rates are positive but low, a liquidity trap exists such that the demand for money becomes infinitely elastic. Changes in the real supply of money then have no effect at all. Of all the commentators on Fried ...
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.