Table of Contents
CH12. AGGRGATE SUPPLY
AGGREGATE SUPPLY
STICKY WAGE MODEL
PPT Slide
2.Workers Misperception
PPT Slide
PPT Slide
4. Sticky Price Model
Implication of the Four Models
Implications for Policy
Inflation Unemployment and the Phillips Curve
From Aggregate Supply to Phillips Curve
Expectations and inflation Inertia
Two Causes of Rising and Falling Inflation
The Short Run Trade-off
Disinflation and Sacrifice Ratio
Disinflation
Disinflation
Expectation Formation
Natural Rate Hypothesis
HYSTEREISIS
Recession can have a permanent effect if it changes the people who become unemployed:
CH13. THE MACROECONOMIC POLICY DEBATE
CH13....
Case against:
Automatic Stabilizers
1990 Recession
Index of Leading Indicators
Problems with Index of Leading Indicators
Rules vs Discretion
Case for Rule:
Time inconsistency
Rules of Monetary Policy
Rules for fiscal Policy
Balanced Budget Rule
Balanced Budget Rule
Debt/GDP Ratio
CH 14. Recent Developments
Business Cycle Caused by Real Shocks
Disagreements
Interpretation of the Labor Market
Criticism
Importance of Technological Shock
Solow Residual
Critics of Solow Residual
When labor is hoarded firms produce things that are not easily measured (e.g. cleaning factory)
Neutrality of Money:
Friedman and Ann Schwartz
New Keynesian Economics
Staggering wages and prices
CH. 15. Consumption
John Maynard Keyenes Consumption
Keyenes Conjuncture
The early implications
Secular stagnation, Simon Kuznets and Consumption Puzzle
The second anomaly. When Simon Kuznet constructed new data on consumption
PPT Slide
Irving Fisher and Intertemporal Choice
PPT Slide
Consumer Preference
How Change in in r affect Consumption
Borrowing Constraints
Why Japanese Save More
Life Cycle Model
C = (W+RY)/T
Elderly Save More Than Predicted by the Model:
Social Security and Saving
Permanent Income Hypothesis
CH 16. The Debate Over Government Debt
Two Views of Government Debt
PPT Slide
International Trade Effect
Fiscal Policy also causes dollar to appreciate.
Ricardian View of Government Debt
Why Ricardian Theory May not Hold
Measurement Problems
Capital Assets
Uncounted Liability
The Business Cycle.
Ch.17. Investment
Business Fixed Investment
?R/P = ?A(L/K) (1- ?)
The Cost of Capital
Real Cost of Capital:
Determinants of Investment
?K = In[ MPK - Pk/P(r+?)]
Taxes and Investment
The Stock Market and Tobin’s q
Residential Investment
Changes in Housing Demand
CH 18. MONEY SUPPLY AND DEMAND
A Model of Money Supply:
M/B = C+D/C+R
Three Instruments of Money
Money Demand
Portfolio Theory of Money
Transaction Theories of Money Demand
Boumol-Tobin Model
Financial Innovation and the Rise of Near Money
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