• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
3006 Slides
 

3006 Slides

on

  • 712 views

 

Statistics

Views

Total Views
712
Views on SlideShare
712
Embed Views
0

Actions

Likes
0
Downloads
9
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    3006 Slides 3006 Slides Presentation Transcript

    • Macroeconomics for Business
      • Microeconomics
      • Macroeconomics
        • Living Standards (y/pop.)
        • Inflation (P)
        • Unemployment (U)
      .
    • Living Standards
      • Cross-Sectional Data
        • North America, Western Europe, Japan vs.
        • South America, Eastern Europe, South Asia, Africa
      • Time-Series Data
        • US over time; Sub-Saharan Africa
        • China; Singapore
    •  
    •  
    •  
    • Inflation
      • Rule of 72
      • Cross-Sectional Data--Venezuela vs. Japan
      • Time-Series Data--Germany Then and Now; USA
    • Consumer Prices 1800 - 2000 price level 1800 1860 1910 1940 1970 2000
    • Unemployment
      • Cross-Sectional Data:
        • Switzerland vs. Belgium
      • Time-Series Data:
        • The U.S. today vs. 1933
    • Y, y: Gross Domestic Product
      • GDP vs. GNP
      • Market Value
      • Final Goods
      • Produced
      • Year
    • Value Added = Sales - Cost of Purchased Materials Cotton $5 5-0 = 5 Shirt-Wholesale 15 15-5 = 10 Shirt-Retail 30 30-15 = 15 30 Sales Value Added
    • Nominal GDP, Real GDP & the GDP Deflator Nominal (Y) = ( P 2005 x Q 2005 ) - (P 2005 x Q 2005 ) [sales] [materials] Real (y) = (P 1997 x Q 2005 ) - (P 1997 x Q 2005 ) GDP Deflator = Nominal GDP/Real GDP Base Year? Chain-Weighted Real GDP
    • Alternative Measures of Y,y
      • NDP, NNP
      • National Income
      • Personal Income
      • DPI
      • Personal Consumption
      • Personal Savings
      • Size Distribution
      • Functional Distribution
    • Alternative Measures of P
      • GDP Deflator
      • Consumer Price Index
      • Producer Price Index
      • Inflation vs. the Price Level
    • U = (unemployed/LF) x 100%
      • LF
      • Actively looking
      • Discouraged workers
      • “ Unemployed but with a job”
      • Age
      • Paid work
      • GDP Gap = Y p - Y
      • Spending components of GDP C (70%)
      • I (17%)
      • G (19%)
      • (X-M) (-6%)
    • The Federal Reserve System
      • Board of Governors
        • Chairman
      • District Banks
      • FOMC (12) = 7 + 5
      • Lender of Last Resort
      • Targeting of Federal Funds Rate
    • Money Supply Definitions
      • Monetary Base
      • M1
      • M2
    • The Money Supply: Central Bank Impacts
      • Open Market Operations
      • Discount Rate
      • Reserve Requirements
    • The Money Supply: Private Impacts
      • Currency/Deposit Ratio
      • Excess Reserves
      • Account Shifting
    • CLASSICAL MACROECONOMICS VS. MERCANTILISM
      • Real Assets vs. Money
      • Openness vs. Balance of Trade
      • Free Markets/Free Trade vs. Barriers, Subsidies
      Adam Smith
    • COMPETITIVENESS
      • 1. USA
      • 2. Switzerland
      • 3. Denmark
      • 4. Sweden
      • 5. Germany
    • Advantages of Backwardness
      • Copy existing technology
      • Small absolute gains constitute big percentages (1 2 = 100%)
    • Competitiveness: Main Factors
      • Openness
      • Role of Govt
        • Tax Rates
        • Regulation
      • Labor
      • Financial Sector
    •  
    • Classical View of Production (y)
      • Background
      • y = F(K,N)
      • N: N D & N S
      • K = K
      y N Slope =  y/  N = MPN
    • MPN N Rule: Proceed as long as MR > MC Here: MR = P x MPN MC = W N VMP = P x MPN W 0 N D STOP View of Employment (N)
    • What if W Changes? W, VMP N W 0 W 0 ’ N D N D ’ VMP
    • At N D ...
      • W = P x MPN = VMP
      • W/P = MPN
      • Real Wages Around the World
    • N S : Labor Supply
      • Upward Slope Not a Straightforward Matter
      • Immigration
      • LFP: The Changing Nature of Household Production
      • Leisure Time in the US
      N W N S
    • Labor Market Equilibrium W N N S N D (P x MPN) W E N E Full Employment?
    • Overall Equilibrium for y, N y N W N y N S N D y E N E
    • What if P Rises?
      • Labor Demand Shifts Right
      • Labor Supply Shifts Left
      • ‘ N’ is Unaffected
      • So ‘y’ Is Also Unaffected
      y P y s P 0 P 1 y A B
    • Key Classical Assumptions
      • Wages Adjust Flexibly to Equilibrium
        • Contracts?
        • Incomplete Information--Inertia?
      • Workers Understand Their Real Wage and Base Their Labor Supply Decisions on It
    • View of Inflation
      • Equation of Exchange
        • MV = PT
        • MV = Py
      • Quantity Theory of Money
    • Consumer Prices 1800 - 2000 price level 1800 1860 1910 1940 1970 2000
    • Classical View of y d P y y d Monetary vs. Nonmonetary Factors
    • The Classical Theory of Interest Rates R NPS, I E R E NPS Key Factors: 1) Net Private Saving 2) Gross Investment I
    • Suppliers and Demanders of Loanable Funds
      • Households
      • Businesses
      • Government
      • Foreigners
    • The Impact of the Government’s Budget R R B R A A B S (NPS) D (I + PSBR) I LF I A I B
    • Budget Surplus NPS S (NPS + SURPLUS ) R I R A R B A B LF I A I B
    •  
    • Role of R: Classical View
      • Coordinate Present vs. Future
      • Prevent Nonmonetary Events from Affecting V, Total Spending, y D
      • y D = c + i + g; suppose deficit spending
        • “ Crowding Out”
    • J.M. Keynes (1883-1946)
      • View of Capitalism
      • W E ? R E ?
      • S = I (ex ante)
      • Uncertainty, herd mentality, animal spirits, instability
    • Keynesian View (cont’d.)
      • Quantity Adjustment vs. Price Adjustment
      • Y = E (Keynesian equilibrium)
      • E = C + I + G
      • Y = C + I + G
      • Fiscal Policy vs. Monetary Policy
    • Simple Keynesian Multipliers: No Crowding Out k E = 1/1-b k T = -b/1-b k BB = 1 Closing the GDP Gap
    • Housing Bubble 1975 1995 2005 HOUSING CONSUMER GOODS
    • Keynesian y s Curve P y y d y d’ y s A B y A y B =y p P
    • What if P Rises?
      • Labor Demand Shifts Right
      • Labor Supply Shifts Left
      • ‘ N’ is Unaffected
      • So ‘y’ Is Also Unaffected
      y P y s P 0 P 1 y A B
    • Classical, but with W = W P y y s P 0 P 1 y 0 y 1
    • The Liquidity Preference Theory of Interest Rates R M M S M D = L(R,Y) R E E Note Bond Market and LF
    • The Federal Reserve: June 2004 R M M D M S M S’ E E’ 1.00% 1.25%
    • y D -y S Analysis
      • y S slope*
      • y D shifts (IS-LM events)*
      • y S shifts
      • y D slope
    • What if P Rises?
      • Labor Demand Shifts Right
      • Labor Supply Shifts Left
      • ‘ N’ is Unaffected
      • So ‘y’ Is Also Unaffected
      y P y s P 0 P 1 y A B
    • Keynesian y s Curve P y y d y d’ y s A B y A y B =y p P
    • Classical, but with W = W P y y s P 0 P 1 y 0 y 1
    • y S Shifts: Note Production Costs
      • Transition from SR to LR
        • Wage adjustment
        • Disappearance of money illusion (P e )
      • Supply shocks (energy, strikes, etc.)
      • Supply-side economics? (tr, regulation)
      • VLR: K, population, tech.
    • Restrictive Monetary Policy y D y D’ y S SR y S’ SR y S LR P y A B C
    • Stimulative Monetary Policy P y y D y D’ y S SR y S’ SR y S LR A B C
    • Monetarism
      • M S -->Y SR and LR
      • M S -->y SR
      • M S -->P LR
      • Fiscal Policy?
        • y D ? (Note slopes)
        • LR y S (role of govt)
      Milton Friedman (1912- )
    • Name That Economist
      • Classical
      • Keynesian
      • Neo-Keynesian
      • Supply-Sider
      • Monetarist
      Robert Mundell Supply-Sider
    • The Phillips Curve
    • Phillips Meets Friedman PC SR U P The Natural Rate of Unemployment PC LR Why Increased Inflation Can Only Temporarily Reduce Unemployment . A B C
    • Phillips Curve Movements
    • Types of Unemployment
      • Natural
        • Frictional
        • Structural
          • Skills
          • Location
          • Labor Market Restrictions
      • Cyclical
    • P, U: Long Run Policies
      • Target Low Inflation
      • Caution on Labor Market Restrictions, Welfare
      • Education & Training; Lifelong Learning
      .
    • Austrian Business Cycle Theory
      • Nonneutral Injections of Money, Misdirection
      • i: Capital Goods vs. Consumption Goods
      • Later Reversal in Relative Prices and Resource Allocation
      • Frictions, Unemployment
      Friedrich Hayek
    • Austrian Business Cycle Theory R NPS, I NPS NPS +  M S I I 0 I 1 Natural Market PV & Duration; Misdirection E E’
    • A Metaphor: Pour in Honey P K P C
    • Share Prices: Japan vs. US CPI-Japan
    • Updating the Theory
      • Responsiveness of C to R
        • Durable Goods, Housing
        • Proceeds from Refi’s
      • Wealth Effects on C
      • Duration of High-Tech Company Investments (dot.com cash flows)
      • “ R” vs. “Cost of Capital”
    • Housing Price Bubble? 1975 1995 2005 HOUSING CONSUMER GOODS
    • Long Run Growth
      • System
      • Culture
      • Saving (K)
      • Education (Human K)
      • Technology
      $40000 5000 1500 $500
    • Competitiveness: Main Factors
      • Openness
      • Role of Govt
        • Tax Rates
        • Regulation
      • Labor
      • Financial Sector
    •  
    • BALANCE OF PAYMENTS
      • CREDITS (+) DEBITS (-)
      • CURRENT ACCOUNT:
        • Exports Imports
        • Investment Income Investment Income Received Paid
        • Transfer Income Transfer Income Received Paid
      • CAPITAL ACCOUNT:
        • Capital Inflow Capital Outflow
    • Flexible ER, Trade Deficit , BP = 0 foreign currency/$ $ Q (Q + CO ) (S) E ER E X (X + CI ) (D) (X-Q)<0 ER (X-Q=0)
    • Flexible ER, Trade Surplus, BP=0 X (X + CI) (D) foreign currency/¥ E ER E Q (Q + CO ) (S) ER (X-Q)=0 ¥
    • PURCHASING POWER PARITY?
      • The Big Mac Test
      • Short Run
      • Long Run? Role of Inflation
      • Barriers
      • Sustained Capital Flows?
    • Major Reasons for Currency Movements
      • Short-term: Expected IRRs, Central Bank intervention Long-term:
        • PPP?
        • Reversal of Current Account Balance?
          • Recent US
      $