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... over a longer time frame, that business failures are negatively correlated with inflation. These relationships do not appear to be driven by the real-business cycle, oil-price shocks, or monetary shocks. We consider two possible mechanisms through which inflation may affect establishment turnover, a ...
... over a longer time frame, that business failures are negatively correlated with inflation. These relationships do not appear to be driven by the real-business cycle, oil-price shocks, or monetary shocks. We consider two possible mechanisms through which inflation may affect establishment turnover, a ...
197—l975 Knut anton brk
... The macroeconomic structure of our model includes a financial system, ...
... The macroeconomic structure of our model includes a financial system, ...
lecture5_2009 - Dr. Rajeev Dhawan
... A: Interest rate is cyclical because inflation rate in the model at first is smaller than or lags the money supply growth rate, and then later overshoots it. The important thing to note is that if the inflation rate is equal to the money growth rate, then there will be no dynamics! Q: Why does Infla ...
... A: Interest rate is cyclical because inflation rate in the model at first is smaller than or lags the money supply growth rate, and then later overshoots it. The important thing to note is that if the inflation rate is equal to the money growth rate, then there will be no dynamics! Q: Why does Infla ...
2006-IV
... seemed to be replaced by the concerns about the economic slowdown. Both of these concerns might lead to an increase in global risk perception and have an unfavorable effect on inflation in the short term by causing fluctuations in emerging economies. In case the medium-term expectations are affected ...
... seemed to be replaced by the concerns about the economic slowdown. Both of these concerns might lead to an increase in global risk perception and have an unfavorable effect on inflation in the short term by causing fluctuations in emerging economies. In case the medium-term expectations are affected ...
The globalisation of inflation - Bank for International Settlements
... At the heart of the globalisation of inflation (GI) hypothesis is the view that the factors influencing domestic inflation have become increasingly global. One implication of this hypothesis is that global, and not just domestic, measures of economic slack should be relevant determinants of domestic ...
... At the heart of the globalisation of inflation (GI) hypothesis is the view that the factors influencing domestic inflation have become increasingly global. One implication of this hypothesis is that global, and not just domestic, measures of economic slack should be relevant determinants of domestic ...
Causes of Deflation
... 4. Reduced Stake in Investments when the economy goes through a series of deflation, investors tend to view cash as one of their best possible investments. Investors will watch their money grow simply by holding onto it. Additionally, the interest rates investors earn often decrease significantly as ...
... 4. Reduced Stake in Investments when the economy goes through a series of deflation, investors tend to view cash as one of their best possible investments. Investors will watch their money grow simply by holding onto it. Additionally, the interest rates investors earn often decrease significantly as ...
Macroeconomic Past Paper Questions and Mark
... Candidates may include the following: a definition of the multiplier a definition of national income an explanation of the multiplier and its effect on national income an identification of leakages/withdrawals and injections/additions as factors that determine the size of the multiplier an explanati ...
... Candidates may include the following: a definition of the multiplier a definition of national income an explanation of the multiplier and its effect on national income an identification of leakages/withdrawals and injections/additions as factors that determine the size of the multiplier an explanati ...
Axel A Weber: The role of interest rates in theory and practice
... both an input into and an output of monetary policy decisions – they are instrument variables as well as indicator variables. Of course, there is no such thing as ‘the’ interest rate. Rather, there is a wide variety of them. Neglecting other relevant features, we have to distinguish interest rates a ...
... both an input into and an output of monetary policy decisions – they are instrument variables as well as indicator variables. Of course, there is no such thing as ‘the’ interest rate. Rather, there is a wide variety of them. Neglecting other relevant features, we have to distinguish interest rates a ...
Chapter 19 Output and Inflation in the Short Run: Aggregate Supply
... natural rate when people underestimate or overestimate the rate of inflation. This might seem to suggest that economic activity can only deviate from its long run trend for extended periods of time if expectations are ’sticky’ in the sense that economic agents keep on overestimating or underestimati ...
... natural rate when people underestimate or overestimate the rate of inflation. This might seem to suggest that economic activity can only deviate from its long run trend for extended periods of time if expectations are ’sticky’ in the sense that economic agents keep on overestimating or underestimati ...
university of maiduguri - Unimaid, Centre for Distance Learning
... real wages and the volume of output (and hence employment) are uniquely corelated, so that in general, an increase in employment can only occur in the accompaniment of a decline in the rate of wages. In his famous book the general theory of Employment, Keynes gives additional definition of full empl ...
... real wages and the volume of output (and hence employment) are uniquely corelated, so that in general, an increase in employment can only occur in the accompaniment of a decline in the rate of wages. In his famous book the general theory of Employment, Keynes gives additional definition of full empl ...
Sticky Leverage Joao Gomes, Urban Jermann and Lukas Schmid February 23, 2016
... As a result, even non-defaulting firms cut future investment and production plans, as the increased (real) debt lowers the expected rewards to their equity owners. It is this debt overhang phenomenon - emphasized in empirical studies of financial crises and almost entirely missing from standard mode ...
... As a result, even non-defaulting firms cut future investment and production plans, as the increased (real) debt lowers the expected rewards to their equity owners. It is this debt overhang phenomenon - emphasized in empirical studies of financial crises and almost entirely missing from standard mode ...
Sticky Leverage Joao Gomes, Urban Jermann and Lukas Schmid October 14, 2014
... As a result, even non-defaulting firms cut future investment and production plans, as the increased (real) debt lowers the expected rewards to their equity owners. It is this debt overhang phenomenon - emphasized in empirical studies of financial crises and almost entirely missing from standard mode ...
... As a result, even non-defaulting firms cut future investment and production plans, as the increased (real) debt lowers the expected rewards to their equity owners. It is this debt overhang phenomenon - emphasized in empirical studies of financial crises and almost entirely missing from standard mode ...
chapter summary
... an increase in the supply of money reduces the interest rate, which increases investment. This boosts aggregate demand, which increases real output and the price level. The long-run approach focuses on the role of money through the equation of exchange, which states that the quantity of money, M, mu ...
... an increase in the supply of money reduces the interest rate, which increases investment. This boosts aggregate demand, which increases real output and the price level. The long-run approach focuses on the role of money through the equation of exchange, which states that the quantity of money, M, mu ...
Lecture7 - UCSB Economics
... What is the Consumer Price Index? What is its purpose? What effect could a higher inflation rate have on the US economy? ...
... What is the Consumer Price Index? What is its purpose? What effect could a higher inflation rate have on the US economy? ...
Chapter 21 - The influence of monetary and fiscal policy on aggregate demand
... r1), the quantity of money people want to hold (Md1) is less than the quantity the Fed has created, and this surplus of money puts downward pressure on the interest rate. Conversely, if the interest rate is below the equilibrium level (such as at r2), the quantity of money people want to hold (Md2) ...
... r1), the quantity of money people want to hold (Md1) is less than the quantity the Fed has created, and this surplus of money puts downward pressure on the interest rate. Conversely, if the interest rate is below the equilibrium level (such as at r2), the quantity of money people want to hold (Md2) ...
Chapter 1
... The demand for money, however, is more complex in being related (positively) to the level of nominal income and (negatively) to a rate of interest. In Figure 1, we show such a demand curve drawn for each of three levels of income. For each level of income, there is a corresponding rate of interest ( ...
... The demand for money, however, is more complex in being related (positively) to the level of nominal income and (negatively) to a rate of interest. In Figure 1, we show such a demand curve drawn for each of three levels of income. For each level of income, there is a corresponding rate of interest ( ...
NBER WORKING PAPER SERIES GLOBALIZATION AND INFLATION DYNAMICS: Argia M. Sbordone
... main themes: that globalization has contributed to bring down US inflation, and that it has affected the sensitivity of inflation to output fluctuations. Several recent policymakers speeches have addressed the issue of whether more intense competition, generated by the increase in trade experienced s ...
... main themes: that globalization has contributed to bring down US inflation, and that it has affected the sensitivity of inflation to output fluctuations. Several recent policymakers speeches have addressed the issue of whether more intense competition, generated by the increase in trade experienced s ...
Free Full Text ( Final Version , 817kb )
... normally used to examine long term price trends because it excludes the short term volatile components such as food and oil prices from a broad price index. All in all, each price index measurement has advantages and disadvantages, respectively. CPI and PPI can be measured easily in both annual and ...
... normally used to examine long term price trends because it excludes the short term volatile components such as food and oil prices from a broad price index. All in all, each price index measurement has advantages and disadvantages, respectively. CPI and PPI can be measured easily in both annual and ...
Economics Exit Exam Preparation
... this is possible depends on the elasticities of demand and supply. Generally, the more elastic (inelastic) demand is, the more difficult (easier) it is for the firm to pass the tax burden to the consumer. In contrast, the more inelastic (elastic) supply is, the more difficult (easier) it is to pass ...
... this is possible depends on the elasticities of demand and supply. Generally, the more elastic (inelastic) demand is, the more difficult (easier) it is for the firm to pass the tax burden to the consumer. In contrast, the more inelastic (elastic) supply is, the more difficult (easier) it is to pass ...
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.