Case Study: Keynesians in the White House
... good job of describing the economy in the long-run. ...
... good job of describing the economy in the long-run. ...
Discussion of ”The cyclical behavior of equilibrium unemployment
... convenient formulations made for tractability, but which nevertheless may be questionable both from a theoretical and an empirical point of view. Reflecting my own research interests, I will start with the wage setting. A crucial assumption for the wage setting is that the rigid or predetermined wag ...
... convenient formulations made for tractability, but which nevertheless may be questionable both from a theoretical and an empirical point of view. Reflecting my own research interests, I will start with the wage setting. A crucial assumption for the wage setting is that the rigid or predetermined wag ...
short-run macroeconomic equilibrium
... Long-Run Macroeconomic Equilibrium The economy is in long-run macroeconomic equilibrium when the point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve. ...
... Long-Run Macroeconomic Equilibrium The economy is in long-run macroeconomic equilibrium when the point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve. ...
Money & Banking
... • What happens next depends on what policymakers do; they can: • Take advantage of the downward pressure on inflation to reduce their inflation target • Initiate actions that ensure that inflation does not fall. ...
... • What happens next depends on what policymakers do; they can: • Take advantage of the downward pressure on inflation to reduce their inflation target • Initiate actions that ensure that inflation does not fall. ...
Dynamic Asymmetries in the Australian Labour Market Philip M. Bodman School of Economics
... not seem concerned with them .... I conclude that the symmetry / asymmetry question has as much, and maybe even more, practical significance than debates over identification assumptions that have influenced much of the empirical macroeconomic literature over the past 20 years.” Of course, as Koop an ...
... not seem concerned with them .... I conclude that the symmetry / asymmetry question has as much, and maybe even more, practical significance than debates over identification assumptions that have influenced much of the empirical macroeconomic literature over the past 20 years.” Of course, as Koop an ...
Ito Technical Working Paper No. 1
... corresponding offer curve is a broken line, F. The trade and offer curves of the household in the case of employment uncertainty are shown ...
... corresponding offer curve is a broken line, F. The trade and offer curves of the household in the case of employment uncertainty are shown ...
File
... Refers to the after-tax incomes of households. As disposable income rises, C increases. If disposable income falls, C will fall. When value of existing wealth (real assets and financial assets) increases, households tend to spend more on goods and services. When wealth decreases, consumption decreas ...
... Refers to the after-tax incomes of households. As disposable income rises, C increases. If disposable income falls, C will fall. When value of existing wealth (real assets and financial assets) increases, households tend to spend more on goods and services. When wealth decreases, consumption decreas ...
PDF Version - Cleveland State University
... private investment and does not raise output.” Kling argues that this “story” only applies when the economy is at full employment. “In the Keynesian story, if investment declines (due to a drop in ‘animal spirits’), saving declines to match investment. They re‐equate at a low level of total output, ...
... private investment and does not raise output.” Kling argues that this “story” only applies when the economy is at full employment. “In the Keynesian story, if investment declines (due to a drop in ‘animal spirits’), saving declines to match investment. They re‐equate at a low level of total output, ...
Chapter 16: FISCAL POLICY
... Taxes on consumption expenditure add to the tax wedge that lowers the potential GDP. The reason is that a tax on consumption expenditure raises the prices paid for consumption goods and services and is equivalent to a cut in the real wage rate. Therefore, the higher the tax on consumption expendi ...
... Taxes on consumption expenditure add to the tax wedge that lowers the potential GDP. The reason is that a tax on consumption expenditure raises the prices paid for consumption goods and services and is equivalent to a cut in the real wage rate. Therefore, the higher the tax on consumption expendi ...
Which of the following is the most fundamental issue that economics
... the federal funds rate 12. In the circular flow diagram of a market economy, which of the following supplies the factors of production? a. The business sector b. The government c. The household sector d. Financial sector e. The foreign sector 13. If the velocity of money is constant and the aggrega ...
... the federal funds rate 12. In the circular flow diagram of a market economy, which of the following supplies the factors of production? a. The business sector b. The government c. The household sector d. Financial sector e. The foreign sector 13. If the velocity of money is constant and the aggrega ...
Economic Growth, Business Cycles, Unemployment, and Inflation
... commensurate with the individual's training or past job experience. They argue that jobs should be closer to home, so people do not have to move. According to this view, unemployment is mainly cyclical and structural. ...
... commensurate with the individual's training or past job experience. They argue that jobs should be closer to home, so people do not have to move. According to this view, unemployment is mainly cyclical and structural. ...
PDF
... • Attitudinal Changes: instead of saving and waiting, we turned to spending and consuming, pushing up prices. • Full Employment Policies: we overstimulated the economy in an effort to put people to work. • The Rise of Particular Interest Groups (PIGs): with Political Action Committees, specific inte ...
... • Attitudinal Changes: instead of saving and waiting, we turned to spending and consuming, pushing up prices. • Full Employment Policies: we overstimulated the economy in an effort to put people to work. • The Rise of Particular Interest Groups (PIGs): with Political Action Committees, specific inte ...
Answers to First Midterm
... c. (2 points) Describe the government’s initial budget situation. In your answer be sure to relate the budget situation to the level of government saving. Since net taxes are greater than government expenditure on goods and services, the government is running a budget surplus and therefore has posit ...
... c. (2 points) Describe the government’s initial budget situation. In your answer be sure to relate the budget situation to the level of government saving. Since net taxes are greater than government expenditure on goods and services, the government is running a budget surplus and therefore has posit ...
mmi04-razin 224754 en
... potential output is not considered in this paper. Rather, the paper demonstrates how to bring the potential output into the aggregate supply relationship, by incorporating the effects of investment in capacity on aggregate supply. The analysis is conducted in an optimization-based “New Keynesian” fr ...
... potential output is not considered in this paper. Rather, the paper demonstrates how to bring the potential output into the aggregate supply relationship, by incorporating the effects of investment in capacity on aggregate supply. The analysis is conducted in an optimization-based “New Keynesian” fr ...
The Effects of Unemployment on Crime Rates in the U.S.
... Depression in the 1930s, this correlation is more than relevant. Recessions, the peak of a trough in the business cycles, occur when the economy is contracting. This leads to a loss of jobs on a widescale. The unemployment rate is one of the best indicators of the health of our economy. High une ...
... Depression in the 1930s, this correlation is more than relevant. Recessions, the peak of a trough in the business cycles, occur when the economy is contracting. This leads to a loss of jobs on a widescale. The unemployment rate is one of the best indicators of the health of our economy. High une ...
Chapter 1: Introduction
... unemployment u* and unemployment rate u0 when the central bank has set the real interest rate to its normal average value r*; when the first is higher than the second, inflation is higher because there is an inflationary bias to demand when the real interest rate is at its normal average value r*. ...
... unemployment u* and unemployment rate u0 when the central bank has set the real interest rate to its normal average value r*; when the first is higher than the second, inflation is higher because there is an inflationary bias to demand when the real interest rate is at its normal average value r*. ...
Inflation - luthapmacro
... -Firms cannot respond to increases in demand by increasing output. So, in effect, further increases in demand raise the price level. The rate of inflation may be high and still rising because total demand greatly exceeds society’s capacity to produce. There is no increase in real output to asorb som ...
... -Firms cannot respond to increases in demand by increasing output. So, in effect, further increases in demand raise the price level. The rate of inflation may be high and still rising because total demand greatly exceeds society’s capacity to produce. There is no increase in real output to asorb som ...
REAL WAGES AND UNEMPLOYMENT WITH EFFECTIVE AND
... Keynes's flexible price model in a competitive goods market has been put forth by post-Keynesian authors such as Davidson (1998), Deprez (1996), Dutt (1987) and Palley (1996: 48, 78). In these models of Keynes's effective demand model of the General Theory, firms are assumed to be atomistic: there i ...
... Keynes's flexible price model in a competitive goods market has been put forth by post-Keynesian authors such as Davidson (1998), Deprez (1996), Dutt (1987) and Palley (1996: 48, 78). In these models of Keynes's effective demand model of the General Theory, firms are assumed to be atomistic: there i ...
Full employment
Full employment, in macroeconomics, is the level of employment rates where there is no cyclical or deficient-demand unemployment. It is defined by the majority of mainstream economists as being an acceptable level of unemployment somewhere above 0%. The discrepancy from 0% arises due to non-cyclical types of unemployment, such as frictional unemployment (there will always be people who have quit or have lost a seasonal job and are in the process of getting a new job) and structural unemployment (mismatch between worker skills and job requirements). Unemployment above 0% is seen as necessary to control inflation in capitalist economies, to keep inflation from accelerating, i.e., from rising from year to year. This view is based on a theory centering on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); in the current era, the majority of mainstream economists mean NAIRU when speaking of ""full"" employment. The NAIRU has also been described by Milton Friedman, among others, as the ""natural"" rate of unemployment. Having many names, it has also been called the structural unemployment rate.The 20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and their political biases. For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s. Recently, economists have emphasized the idea that full employment represents a ""range"" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the ""full-employment unemployment rate"" of 4 to 6.4%. This is the estimated unemployment rate at full employment, plus & minus the standard error of the estimate.The concept of full employment of labor corresponds to the concept of potential output or potential real GDP and the long run aggregate supply (LRAS) curve. In neoclassical macroeconomics, the highest sustainable level of aggregate real GDP or ""potential"" is seen as corresponding to a vertical LRAS curve: any increase in the demand for real GDP can only lead to rising prices in the long run, while any increase in output is temporary.