Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
ECON 303 Intermediate Macroeconomics Instructor: Bernard Malamud –Office: BEH 502 Phone (702) 895 –3294 Fax: 895 – 1354 »Email: [email protected] Website: www.unlv.edu/faculty/bmalamud Office hours: TR 12-1 pm; 2:30 – 3:30pm; and by appointment Macro News 2007 CPI Inflation: 4.1 %, highest in 17 years! – Core CPI up only 2.4%. 2007 Housing Construction: Down 25% – Clark County Home Sales: New – 45% Existing – 40% December Index of Industrial Production: No gain December Index of Leading Indicators: Down 0.4% December Unemployment Rate: 5.0%, up from 4.7% December Retail Sales: Down 4% Index of Consumer Sentiment: Down 18%, Nov - Nov S & P 500 – December 31, 2007 1468 – January 17, 2008 [Philadelphia Beige Book] 1333 January 22, 2008: 75 Basis Point Fed Funds Rate Cut Macro News 2008 CPI Inflation: ~1 %, lowest in 40 years! – Core CPI up 2.4%. 2007 Housing Construction: Down 25% – Clark County Home Sales: New – 45% Existing – 40% December Index of Industrial Production: - 5 ½ % December Index of Leading Indicators: Down 0.4% December Unemployment Rate:6.7%, 7.2% up from 5% last year December Retail Sales: Down ~4% Index of Consumer Sentiment: Down ~30%,Nov - Nov S & P 500 – January 8, 2008 901 vs. December 31,2007 1468 January 22, 2008:75 Basis Point Fed Funds Rate Cut to 4% Latest Target FFRATE: 0 - .25% Today’s Headlines IMF: Global Stimulus Package •Timely Timely Targeted Temporary Robust (as there is an urgent need for action) · Large (because the drop in demand is large) · Lasting (as the recession will likely last for some time) · Diversified (as there is uncertainty regarding which measures will be most effective) · Contingent (to indicate that further action can be taken) · Collective (all countries that can should expand G-T given the severity and global nature of the downturn)· •Sustainable (to avoid debt explosion in the long run and adverse effects in the short run). Stimulus Program Proposals: Re-emergence of Fiscal Policy Grants/loans to states “Shovel-ready” infrastructure – Unintended consequence…hold back Military spending Green investment – Environment, energy Tax cuts – Investment tax credit – Sales tax rebate Automatic stabilizers – $Trillion deficits as far as eye can see Obama Speech: January 8, 2008 “We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future,” Mr. Obama said. “And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world. In short, a bad situation could become dramatically worse.” He said he aimed to double the production of alternative energy within three years, a seemingly ambitious target; computerize all medical records in the country within five years, a move he said could save lives, money and jobs; modernize 75 percent of federal buildings and improve energy efficiency in 2 million homes; upgrade classrooms, libraries and laboratories in thousands of schools, and expand broadband access to rural areas . Mr. Obama blamed the current economic morass — in particularly stark terms — on “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington.” “I understand that some might be skeptical of this plan. Our government has already spent a good deal of money, but we haven’t yet seen that translate into more jobs or higher incomes or renewed confidence.” He insisted that only government could “break the vicious cycles that are crippling our economy,” prevent “the catastrophic failure of financial institutions,” restart the flow of credit and restore the regulations needed to prevent such a crisis in the future. Y = C + I + G + Ex - Im Course Objectives Refresh your command of … Macroeconomic terminology eco-talk Macro Facts Schools of thought Course Objectives Master MODELS – Demand Side Models AD Multiplier IS – LM – Supply Side Models AS Wage setting – Price setting Phillips Curve – Role of Expectations … in theory and practice – Stabilizing an Unstable Economy Understanding the current crisis Macro - variables Output … Real GDP … Growth Rate Unemployment Inflation … CPI, GDP Deflator Macro Time Frames Short-run … sticky price Medium-run … price adjusts Long-run … economic growth Where We’re Heading Develop tools to address macro questions: – What drives expansions and recessions? – What holds inflation in check? – Can the unemployment rate be too low? What causes unemployment? – Why do growth rates differ across countries? Where to Find the Numbers http://research.stlouisfed.org/fred2/ www.bls.gov/data/ www.economist.com www.bea.doc.gov http://www.gpoaccess.gov/eop/ www.oecd.org The Federal Funds Rate and Its “Real” Value Real interest rate = Nominal rate – Expected Inflation Facilities: Primary dealers, commercial paper TermAssetBackedSecuritiesLoanFacility(TALF) •CITI Financial crisis of 2007–2008 Specific issues By country Legislation and policy Company failures Government bailouts and takeovers Company acquisitions United States housing market correction · World food price crisis · Energy crisis (Central Asia) · Subprime mortgage crisis (timeline, List of writedowns) · Global financial crisis · Automotive industry crisis · List of entities involved (Bankrupt or acquired banks, Bankrupt retailers) · 2008 East Asian meetings Belgium · Iceland · Russia Banking (Special Provisions) Act 2008 · Housing and Economic Recovery Act of 2008 · Economic Stimulus Act of 2008 · Emergency Economic Stabilization Act of 2008 · Troubled Assets Relief Program · Term Asset-Backed Securities Loan Facility · 2008 United Kingdom bank rescue package · China Stimulus Plan · Obama stimulus plan New Century Financial Corporation · American Freedom Mortgage · American Home Mortgage · Bernard L. Madoff Investment Securities LLC · Lehman Brothers (bankruptcy) · Mervyns · NetBank · Terra Securities (scandal) · Sentinel Management Group · Washington Mutual · Icesave · Kaupthing Singer & Friedlander · Yamato Life Northern Rock (nationalisation) · IndyMac Federal Bank · Fannie Mae (takeover) · Freddie Mac (takeover) · AIG · Bradford & Bingley · Fortis · Glitnir · Hypo Real Estate · Dexia · Landsbanki · Kaupthing · ING Group · Citigroup · General Motors · Chrysler Ameriquest Mortgage · Countrywide Financial · Bear Stearns · Alliance & Leicester · Merrill Lynch · Washington Mutual · Derbyshire Building Society · Cheshire Building Society · HBOS · Lehman Brothers · Wachovia · Sovereign Bank · Barnsley Building Society ·