NBER WORKING PAPER SERIES STICKY INFORMATION: N. Gregory Mankiw
... How do employment and inflation respond to real and monetary forces? What frictions cause these macroeconomic variables to deviate from the ideals that would arise in a fully classical world? These questions are at the center of macroeconomic research, as well as at the center of much of Ned Phelps ...
... How do employment and inflation respond to real and monetary forces? What frictions cause these macroeconomic variables to deviate from the ideals that would arise in a fully classical world? These questions are at the center of macroeconomic research, as well as at the center of much of Ned Phelps ...
File ap macro 2-6 unit summary
... (M) what will happen to prices (P)? Ex: Assume money supply is $5 and it is being used to buy 10 products with a price of $2 each. 1. How much is the velocity of money? 2. If the velocity and output stay the same, what will happen if the amount of money is increase to $10? Notice, doubling the money ...
... (M) what will happen to prices (P)? Ex: Assume money supply is $5 and it is being used to buy 10 products with a price of $2 each. 1. How much is the velocity of money? 2. If the velocity and output stay the same, what will happen if the amount of money is increase to $10? Notice, doubling the money ...
Detailed solutions to multiple choices of PS #2
... 1. A rise in the real rate of interest increases the price of capital, and hence causes a decrease in investment. Real money demand is determined by the equation: L=k*Y – h*i, where i = r+ expected inflation rate. Hence, the increase of real rate of interest when the expected inflation rate stays co ...
... 1. A rise in the real rate of interest increases the price of capital, and hence causes a decrease in investment. Real money demand is determined by the equation: L=k*Y – h*i, where i = r+ expected inflation rate. Hence, the increase of real rate of interest when the expected inflation rate stays co ...
Aff Inflation DA 7WK - Open Evidence Archive
... There’s no question that America’s recovery from the financial crisis has been disappointing. In fact, the era since 2007 is best viewed as a “depression,” an extended period of economic weakness and high unemployment that, like the Great Depression of the 1930s, persists despite episodes during whi ...
... There’s no question that America’s recovery from the financial crisis has been disappointing. In fact, the era since 2007 is best viewed as a “depression,” an extended period of economic weakness and high unemployment that, like the Great Depression of the 1930s, persists despite episodes during whi ...
AgriSETA
... probability. The term "assurance" is used more commonly in the in Great Britain and South Africa. Assurance (insurance) is a contract whereby one party, the assurer/insurer, in return for a consideration, called the premium, agrees to pay to the other party, called the assured/insured, a sum of mone ...
... probability. The term "assurance" is used more commonly in the in Great Britain and South Africa. Assurance (insurance) is a contract whereby one party, the assurer/insurer, in return for a consideration, called the premium, agrees to pay to the other party, called the assured/insured, a sum of mone ...
Macroeconomics, 6e (Abel et al.) Chapter 12 Unemployment and
... 7) A difficulty faced by policymakers who wish to use the unemployment rate as a guide to whether the economy is weak or strong is that A) the natural rate of unemployment is hard to measure. B) the natural rate of unemployment almost never changes. C) policymakers must use data on output to ...
... 7) A difficulty faced by policymakers who wish to use the unemployment rate as a guide to whether the economy is weak or strong is that A) the natural rate of unemployment is hard to measure. B) the natural rate of unemployment almost never changes. C) policymakers must use data on output to ...
Menu Costs and Phillips Curves - The University of Chicago Booth
... Phillips curves—that they are designed to analyze. Under menu costs, any individual price will be constant most of the time and then occasionally jump to a new level. Thus the center of the model will be the firm’s pricing decision to reprice or not to do so. Many New Keynesian models do not examine ...
... Phillips curves—that they are designed to analyze. Under menu costs, any individual price will be constant most of the time and then occasionally jump to a new level. Thus the center of the model will be the firm’s pricing decision to reprice or not to do so. Many New Keynesian models do not examine ...
Menu Costs and Phillips Curves
... Phillips curves—that they are designed to analyze. Under menu costs, any individual price will be constant most of the time and then occasionally jump to a new level. Thus the center of the model will be the firm’s pricing decision to reprice or not to do so. Many New Keynesian models do not examine ...
... Phillips curves—that they are designed to analyze. Under menu costs, any individual price will be constant most of the time and then occasionally jump to a new level. Thus the center of the model will be the firm’s pricing decision to reprice or not to do so. Many New Keynesian models do not examine ...
The Impact of Budget Deficit
... transition economies not at war. Budget deficits exceeded 10% of GDP. As economic policy become more constructive, the budget deficit level diminished. The rate of inflation declined even more sharply to moderate levels. This can be clearly seen as a proof of the deficitinduced hyperinflation. The m ...
... transition economies not at war. Budget deficits exceeded 10% of GDP. As economic policy become more constructive, the budget deficit level diminished. The rate of inflation declined even more sharply to moderate levels. This can be clearly seen as a proof of the deficitinduced hyperinflation. The m ...
Macro 2 Summary
... (M) what will happen to prices (P)? Ex: Assume money supply is $5 and it is being used to buy 10 products with a price of $2 each. 1. How much is the velocity of money? 2. If the velocity and output stay the same, what will happen if the amount of money is increase to $10? Notice, doubling the money ...
... (M) what will happen to prices (P)? Ex: Assume money supply is $5 and it is being used to buy 10 products with a price of $2 each. 1. How much is the velocity of money? 2. If the velocity and output stay the same, what will happen if the amount of money is increase to $10? Notice, doubling the money ...
Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective
... Macroeconomic models sometimes differ in their predictions about the effect of a particular event on the economy, owing to differences in theoretical design, empirical specification, and degree of aggregation. For this reason, reviewing the structure of the FRB/US model is useful for understanding t ...
... Macroeconomic models sometimes differ in their predictions about the effect of a particular event on the economy, owing to differences in theoretical design, empirical specification, and degree of aggregation. For this reason, reviewing the structure of the FRB/US model is useful for understanding t ...
Bade_Parkin_Macro_Lecture_CH17
... changes slowly or barely at all and is around 6 percent, the actual average unemployment rate since 1960. An increasing number of economists question the view that natural unemployment rate in constant. ...
... changes slowly or barely at all and is around 6 percent, the actual average unemployment rate since 1960. An increasing number of economists question the view that natural unemployment rate in constant. ...
Commodity Prices and Monetary Policy in Emerging East Asia
... crisis of two halves. In the first, rising inflation was a major concern, the economic outlook, while weaker, was expected to remain robust, especially for emerging East Asia. In the second-half, the opposite has happened. Amid falling world commodity prices (downward inflationary pressures) driven ...
... crisis of two halves. In the first, rising inflation was a major concern, the economic outlook, while weaker, was expected to remain robust, especially for emerging East Asia. In the second-half, the opposite has happened. Amid falling world commodity prices (downward inflationary pressures) driven ...
The stability of full employment
... In the case of a closed economy these possible effects on aggregate demand consist of the redistribution effect of unanticipated deflation (presumably negative), the price expectations effect (negative, if expectations are extrapolative), what was later to be called the Keynes-effect (positive) and ...
... In the case of a closed economy these possible effects on aggregate demand consist of the redistribution effect of unanticipated deflation (presumably negative), the price expectations effect (negative, if expectations are extrapolative), what was later to be called the Keynes-effect (positive) and ...
Chapter 17
... changes slowly or barely at all and is around 6 percent, the actual average unemployment rate since 1960. An increasing number of economists question the view that natural unemployment rate in constant. ...
... changes slowly or barely at all and is around 6 percent, the actual average unemployment rate since 1960. An increasing number of economists question the view that natural unemployment rate in constant. ...
Is Openness Inflationary? Imperfect Competition and Monetary
... The goal of this paper is to try to answer the question of whether or not increased openness to international markets is inflationary using a structural international general equilibrium model derived from microeconomic foundations. This question has been the subject of a large body of research begi ...
... The goal of this paper is to try to answer the question of whether or not increased openness to international markets is inflationary using a structural international general equilibrium model derived from microeconomic foundations. This question has been the subject of a large body of research begi ...
the consumer price index
... money to maintain the same standard of living. Economists use the term inflation to describe a situation in which the economy’s overall price level is rising. The inflation rate is the percentage change in the price level from the previous period. The preceding chapter showed how economists can meas ...
... money to maintain the same standard of living. Economists use the term inflation to describe a situation in which the economy’s overall price level is rising. The inflation rate is the percentage change in the price level from the previous period. The preceding chapter showed how economists can meas ...
Michael Bruno Working Paper 1050
... These were accompanied by a renewed surge of immigration during the post—1967 euphoria, and combined with a very flexible labor market (once the Israeli labor market was opened to Arab workers from the Gaza Strip and the West Bank in 1968) which enabled the continued rapid expansion of industry, dir ...
... These were accompanied by a renewed surge of immigration during the post—1967 euphoria, and combined with a very flexible labor market (once the Israeli labor market was opened to Arab workers from the Gaza Strip and the West Bank in 1968) which enabled the continued rapid expansion of industry, dir ...
Monetary Policy Fall 2016 (material for last course outline)
... interest (they paid no interest at all prior to 2007). If the banks agree to sell interestbearing government bonds to the Fed, they must intend to loan the reserves out. (They don’t want to just sit on the barren reserve deposits.) To get people to borrow the new reserves, the banks must lower inter ...
... interest (they paid no interest at all prior to 2007). If the banks agree to sell interestbearing government bonds to the Fed, they must intend to loan the reserves out. (They don’t want to just sit on the barren reserve deposits.) To get people to borrow the new reserves, the banks must lower inter ...
The Loanable Funds Model of Interest Rates
... demand schedule (for bonds) out. Inward borrowing from overseas businesses will shift the supply schedule (for bonds) out. ...
... demand schedule (for bonds) out. Inward borrowing from overseas businesses will shift the supply schedule (for bonds) out. ...
The velocity of money is: The same as the inflation rate. The number
... 7. A difference between Keynesian and Friedman money demand relationships is: a. Friedman money demand implies velocity is unpredictable but Keynesian money demand considers velocity stable. b. Keynesian money demand depends on asset demand but asset demand has little role in Friedman money demand. ...
... 7. A difference between Keynesian and Friedman money demand relationships is: a. Friedman money demand implies velocity is unpredictable but Keynesian money demand considers velocity stable. b. Keynesian money demand depends on asset demand but asset demand has little role in Friedman money demand. ...
ukraine_outlook_jan_2015a
... Most risk are to the downside but the Russian economic crisis may make the Russian negotiators more moderate. They now need a deal just as much as the Ukrainians If there is further compromise militarily, then there is even some quick positive upside possible on the FX rate which would run though po ...
... Most risk are to the downside but the Russian economic crisis may make the Russian negotiators more moderate. They now need a deal just as much as the Ukrainians If there is further compromise militarily, then there is even some quick positive upside possible on the FX rate which would run though po ...
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.