1) The document discusses factors that influence economic growth rates, including population size and age distribution, labor force participation, unemployment, and productivity.
2) It argues that the most effective way to improve and accelerate economic growth is by increasing productivity through education, research, developing new technologies, and efficiently allocating resources.
3) Political and social factors can also impact economic growth by blocking improvements to productivity.
The document analyzes potential unemployment scenarios in the United States over the next decade. It first examines current unemployment data and trends, finding the unemployment rate at 10% with 17.3% underemployment. It then presents three scenarios: 1) unemployment peaking in late 2010 and returning to pre-recession levels by 2013, based on historical patterns; 2) unemployment declining more slowly due to factors like declining consumer credit, part-time work, and low labor participation; 3) unemployment remaining elevated for years due to challenges across many industries in creating sufficient new jobs.
1) There is a disparity between recent US economic statistics showing weak GDP growth but robust job growth. However, this disparity is misleading because the two statistics are reported differently - GDP as a percentage change and jobs as an absolute number.
2) When the jobs numbers are also expressed as a percentage change annually, the pace of recent job growth is actually slower than in previous economic recoveries and trails six consecutive years of subpar economic growth as measured by both GDP and jobs.
3) Declining labor force participation cannot explain the slower jobs growth because the decline is driven more by disability programs than retirement, and the number of young workers entering the labor force has not been fully absorbed.
This document summarizes key economic indicators in the United States from 2005 to 2015. It discusses components of GDP like consumption, investment, government spending and net exports. It also analyzes unemployment rates, inflation, oil prices and consumer confidence. The economy recovered from the Great Recession, with GDP and consumption increasing steadily in recent years. However, inflation remains low and unemployment higher than pre-recession levels, suggesting more room for improvement. Falling oil prices could boost growth but also pose deflation risks if price declines continue.
An increase in the money supply leads to higher aggregate output and prices in the short-run. However, in the long-run only prices are affected, as output returns to potential output. This is because a rise in prices induces a leftward shift of the short-run aggregate supply curve over time, returning output to potential. Therefore, monetary policy can impact real variables in the short-run but is neutral in the long-run, with only nominal aggregates like prices being permanently affected.
Our President is wrong to think like a macroeconomistStephanie Bohn
The document summarizes evidence from the past 30 years that contradicts the widely held belief that increasing interest rates leads to higher unemployment. It analyzes periods of rising and falling interest rates set by the Federal Reserve and finds:
1) Unemployment actually fell, on average, during periods of rising rates, contrary to expectations.
2) Unemployment rose, on average, during periods of falling rates, which is also contrary to expectations.
3) Even allowing for a one-year lag for monetary policy effects, there is little evidence supporting the link between interest rates and unemployment assumed by most economists.
This document discusses how governments can overcome inflation through monetary and fiscal policies. It explains that monetary policy uses interest rates and open market operations to control the money supply. Through open market operations, the central bank sells securities to lower bank reserves and restrict lending. Reserve requirements can also tighten the money supply by requiring banks to hold more reserves. Fiscal policy involves increasing taxes or reducing government spending to decrease spending in the economy. These contractionary policies aim to slow economic growth and reduce inflation.
This document provides an overview and analysis of current economic conditions in Australia, the United States, and China from the perspective of a business strategy newsletter. It summarizes that:
1) The Australian unemployment rate is projected to peak around 6.5-7.0% in late 2010 before declining again, representing a relatively short 18 month economic downturn.
2) The downturn in the US economy will be more prolonged, with unemployment not peaking until 2014 at around 8% and GDP contraction of 0.7-1.2% for several years, representing a "lost decade" of weak growth.
3) While Chinese exports to the US will decline, domestic consumption is growing and China relies
Do you or your users need information on the South's unemployment, housing and more? We’ll share strategies to enhance expertise with finding essential resources about these timely topics. (Sponsored by GLA GIIG.) Presented at GaCOMO12 by Patricia Kenly and Bette Finn.
The document analyzes potential unemployment scenarios in the United States over the next decade. It first examines current unemployment data and trends, finding the unemployment rate at 10% with 17.3% underemployment. It then presents three scenarios: 1) unemployment peaking in late 2010 and returning to pre-recession levels by 2013, based on historical patterns; 2) unemployment declining more slowly due to factors like declining consumer credit, part-time work, and low labor participation; 3) unemployment remaining elevated for years due to challenges across many industries in creating sufficient new jobs.
1) There is a disparity between recent US economic statistics showing weak GDP growth but robust job growth. However, this disparity is misleading because the two statistics are reported differently - GDP as a percentage change and jobs as an absolute number.
2) When the jobs numbers are also expressed as a percentage change annually, the pace of recent job growth is actually slower than in previous economic recoveries and trails six consecutive years of subpar economic growth as measured by both GDP and jobs.
3) Declining labor force participation cannot explain the slower jobs growth because the decline is driven more by disability programs than retirement, and the number of young workers entering the labor force has not been fully absorbed.
This document summarizes key economic indicators in the United States from 2005 to 2015. It discusses components of GDP like consumption, investment, government spending and net exports. It also analyzes unemployment rates, inflation, oil prices and consumer confidence. The economy recovered from the Great Recession, with GDP and consumption increasing steadily in recent years. However, inflation remains low and unemployment higher than pre-recession levels, suggesting more room for improvement. Falling oil prices could boost growth but also pose deflation risks if price declines continue.
An increase in the money supply leads to higher aggregate output and prices in the short-run. However, in the long-run only prices are affected, as output returns to potential output. This is because a rise in prices induces a leftward shift of the short-run aggregate supply curve over time, returning output to potential. Therefore, monetary policy can impact real variables in the short-run but is neutral in the long-run, with only nominal aggregates like prices being permanently affected.
Our President is wrong to think like a macroeconomistStephanie Bohn
The document summarizes evidence from the past 30 years that contradicts the widely held belief that increasing interest rates leads to higher unemployment. It analyzes periods of rising and falling interest rates set by the Federal Reserve and finds:
1) Unemployment actually fell, on average, during periods of rising rates, contrary to expectations.
2) Unemployment rose, on average, during periods of falling rates, which is also contrary to expectations.
3) Even allowing for a one-year lag for monetary policy effects, there is little evidence supporting the link between interest rates and unemployment assumed by most economists.
This document discusses how governments can overcome inflation through monetary and fiscal policies. It explains that monetary policy uses interest rates and open market operations to control the money supply. Through open market operations, the central bank sells securities to lower bank reserves and restrict lending. Reserve requirements can also tighten the money supply by requiring banks to hold more reserves. Fiscal policy involves increasing taxes or reducing government spending to decrease spending in the economy. These contractionary policies aim to slow economic growth and reduce inflation.
This document provides an overview and analysis of current economic conditions in Australia, the United States, and China from the perspective of a business strategy newsletter. It summarizes that:
1) The Australian unemployment rate is projected to peak around 6.5-7.0% in late 2010 before declining again, representing a relatively short 18 month economic downturn.
2) The downturn in the US economy will be more prolonged, with unemployment not peaking until 2014 at around 8% and GDP contraction of 0.7-1.2% for several years, representing a "lost decade" of weak growth.
3) While Chinese exports to the US will decline, domestic consumption is growing and China relies
Do you or your users need information on the South's unemployment, housing and more? We’ll share strategies to enhance expertise with finding essential resources about these timely topics. (Sponsored by GLA GIIG.) Presented at GaCOMO12 by Patricia Kenly and Bette Finn.
The stock market has rallied recently even as the economy remains weak, similar to walking up a downward-moving escalator. Some signs suggest parts of the economy may be stabilizing, like improvements in manufacturing and services sectors. While employment and GDP numbers remain poor, consumer spending increased in the first quarter. Inventories fell sharply but this may help future growth. Other positive signs include rising consumer confidence and stabilizing housing. Many companies exceeded low earnings estimates, and rapid responses from corporations, consumers, and governments may help lead to eventual recovery.
There is now broad consensus among macroeconomists on key issues:
1) Monetary policy can be used to reduce economic instability by shifting the aggregate demand curve, except in a liquidity trap.
2) Fiscal and monetary policy can limit but not reduce unemployment below the natural rate.
3) Discretionary fiscal policy should be used sparingly due to lags and risk of political business cycles, while monetary policy plays the main stabilization role.
This document discusses capitalization (cap) rates and property values in South Africa. It notes that cap rates have only risen slightly in recent years, despite deteriorating economic fundamentals. This suggests cap rates and property values may be due for a more significant correction. The document examines factors that led to a major decline in cap rates and increase in property values from 2003-2007 for comparison. These included declining interest rates, an economic upswing, and improving business confidence. The current environment of economic stagnation and rising government debt could lead to higher cap rates and lower property values if sentiment changes among investors.
The document provides an overview of the global business environment in August 2015. It discusses the economies of key regions:
- The US economy saw growth in the first half of 2015 driven by consumer spending and low oil prices, though federal spending declined. Household debt levels remained stable while delinquencies decreased slightly.
- The EU recovery remains fragile despite measures like ECB bond purchases. Second quarter GDP growth of 0.3% missed targets as France stagnated and other major economies saw slower growth.
- Other topics covered include expectations for the timing of US interest rate rises, high stock valuations, trade balances of various countries, and the impact of sustained low oil prices on the global economy.
Agenda:
1. What is Inflation.
2. Real life example
3. Causes of inflation
4. Effects of inflation on economy
5. Control Mechanism for inflation
6. Recent and past Inflation rate of Bangladesh
7. Reasons of inflation and measures taken to control inflation in
Bangladesh.
Inflation in Bangladesh and its Impact on Economic GrowthAkib Al Adib Pranto
The document discusses inflation trends in Bangladesh from 2012-2017. Some key points:
- Inflation in Bangladesh averaged 6.60% from 1994-2017, with a high of 10.21% in September 2011 and low of -0.03% in December 1996.
- In September 2017, Bangladesh's inflation rate was 5.45%. Food inflation has generally been higher than non-food inflation.
- Inflation reduces purchasing power and national savings, while also raising import prices and discouraging investment. Both demand-pull and cost-push factors can cause inflation.
- Monetary and fiscal policies can help control inflation in the short-run, while supply reforms and workforce changes aid
The document summarizes how monetary policy works to influence interest rates and aggregate demand. The Federal Reserve uses open market operations and the money supply to target a federal funds rate, thereby affecting investment, GDP, and inflation in pursuit of price stability and full employment. While the Taylor Rule provides a model for predicting interest rate decisions, central banks now focus on inflation targeting by announcing and aiming to hit a specific inflation target.
Topics discussed by Dr. Peter Linneman:
- Does it all come to an end if interest rates rise?
- Is a recession just around the corner? What warning signs should we look for?
- What does the new Administration and Congress mean for real estate and the economy?
- Audience questions
- And more!
1. The document discusses the differences between the short run and long run in macroeconomics, with the short run being when prices do not change much and the long run being when prices have fully adjusted.
2. It explains how wage and price changes can move the economy from a recession or boom in the short run back to full employment in the long run through shifts along the aggregate supply curve.
3. The document also covers how monetary policy can be used to speed up the adjustment process but may lead to higher price levels.
This monthly briefing highlights how the world economy is struggling to gain momentum, emerging economies facing policy dilemma in trying to stabilize currencies and the G20 meeting making a call for new measures to lift growth and create jobs.
For more information:
http://www.un.org/en/development/desa/policy/wesp/wesp_mb.shtml
This document discusses the long-term implications of fiscal policy, including deficits and public debt. It explains that discretionary fiscal policy can be used to stabilize the economy in the short-run through expansionary or contractionary policies. However, long-term effects include impacts on the budget balance, debt, and implicit liabilities like Social Security. Running large deficits risks increasing debt levels to a point where a government may default or need to resort to inflation. Governments aim to balance budgets over the business cycle to avoid these problems.
The document discusses inflation in Bangladesh. It defines inflation as a sustained increase in prices or fall in the value of money. Inflation occurs when currency levels exceed production levels. The document outlines types and causes of inflation including demand-pull and cost-push factors. Effects of inflation are also examined along with methods to control inflation such as monetary and fiscal measures. Current inflation rates in Bangladesh and other SAARC countries are presented.
3 Jan 2009: a bottom in breakevens, commodities, and global yields?Laeeth Isharc
The response of the authorities has been without precedent - the US has a new president, and perhaps confidence in the new administration may stave off the worst consequences of the epidemic contagion of fear - for now, at least. It is certain that for the time being we shall avoid the 29-33 collapse that was associated with every sovereign issuer in Europe except Britain, and much of Latin America and Asia defaulting as well as large numbers of banks in the US (in the days before deposit insurance).
The document provides an overview of the gold market as of June 4, 2021. It covers inflation rates, federal debt levels, gold news and analysis, and the gold price and chart. Inflation unexpectedly surged in April to twice the Fed's target, which could pose upside risks to more persistent inflation if expectations become unanchored. Higher inflation would increase demand for gold as a hedge. However, gold may struggle if interest rates rise in response. The document analyzes factors that could keep inflation elevated and impact the gold market.
Gold may rise as market euphoria about economic recovery ends. While strong GDP growth is expected in the short term due to base effects and stimulus, optimism may be exaggerated, unemployment remains elevated, and risks remain from virus variants. Inflation is already above the Fed's 2% target according to official data, and likely even higher using alternative measures, but the Fed says price increases will be temporary. However, inflation could be more persistent given money supply increases, government spending, and pent-up demand as the economy reopens. Higher inflation would be bullish for gold as an inflation hedge.
The document provides an overview of macroeconomic policies and concepts including:
1) It discusses the business cycle and macroeconomic equilibrium and how disturbances can cause instability.
2) Keynes argued that government intervention is necessary to address inherent instability in free markets. Fiscal and monetary policies can be used to stimulate aggregate demand.
3) Supply-side policies aim to shift aggregate supply curves by incentivizing production. Both demand and supply factors influence macroeconomic outcomes like growth, unemployment and inflation.
Will RBI rate cut keep inflation under check in 2015?IndiaNotes.com
While RBI has begun the rate cut cycle, plenty of headroom for further cuts would be generated going forward as low inflation would be the defining feature of 2015.
In this paper we analyze the evolution of Brazilian inflation under the inflation targeting
system from a cost-push perspective. We identify the main features of three quite distinct
phases (1999-2003, 2004-2009 and 2010-2014) and explain them in terms of tradable
price trends in local currency, changes in the dynamics of monitored prices and behavior
of wage inflation. We conclude that the trend towards continuous nominal exchange rate
devaluation after mid-2011, together with the strengthening of the bargaining power of
workers and the trend of rising real wages since 2006, means that distributive conflicts in
Brazil are getting much more intense. We also suggest that the apparently very irrational
recent (early 2015) change in the orientation of economic policy towards contractionary
fiscal, incomes and monetary policies in a stagnating economy seems to be ultimately
based on the desire to weaken the bargaining power of workers that was much
strengthened during the brief but intense Brazilian “golden age” of 2004-2010.
Obstacle Driven Development has the most comprehensive testing of any engineering process or method. Tests are created for each element of all stages of development.
This presentation shows the various models of Obstacle Driven Development methods and processes. Numerous models, including 3D versions, have been created to help understanding and solve obstacles.
Models range from the simple to the complex with simple 4 stage models to full flowcharts explaining the method and process.
There are 4 key factors that influence a country's economic growth and Gross Domestic Product: investment in human capital through education and training; investment in capital goods like factories, machinery and technology; natural resources available within the country; and entrepreneurship. Nations that invest in these areas will have a more productive workforce and be able to produce more goods and services, leading to higher GDP and economic growth.
The stock market has rallied recently even as the economy remains weak, similar to walking up a downward-moving escalator. Some signs suggest parts of the economy may be stabilizing, like improvements in manufacturing and services sectors. While employment and GDP numbers remain poor, consumer spending increased in the first quarter. Inventories fell sharply but this may help future growth. Other positive signs include rising consumer confidence and stabilizing housing. Many companies exceeded low earnings estimates, and rapid responses from corporations, consumers, and governments may help lead to eventual recovery.
There is now broad consensus among macroeconomists on key issues:
1) Monetary policy can be used to reduce economic instability by shifting the aggregate demand curve, except in a liquidity trap.
2) Fiscal and monetary policy can limit but not reduce unemployment below the natural rate.
3) Discretionary fiscal policy should be used sparingly due to lags and risk of political business cycles, while monetary policy plays the main stabilization role.
This document discusses capitalization (cap) rates and property values in South Africa. It notes that cap rates have only risen slightly in recent years, despite deteriorating economic fundamentals. This suggests cap rates and property values may be due for a more significant correction. The document examines factors that led to a major decline in cap rates and increase in property values from 2003-2007 for comparison. These included declining interest rates, an economic upswing, and improving business confidence. The current environment of economic stagnation and rising government debt could lead to higher cap rates and lower property values if sentiment changes among investors.
The document provides an overview of the global business environment in August 2015. It discusses the economies of key regions:
- The US economy saw growth in the first half of 2015 driven by consumer spending and low oil prices, though federal spending declined. Household debt levels remained stable while delinquencies decreased slightly.
- The EU recovery remains fragile despite measures like ECB bond purchases. Second quarter GDP growth of 0.3% missed targets as France stagnated and other major economies saw slower growth.
- Other topics covered include expectations for the timing of US interest rate rises, high stock valuations, trade balances of various countries, and the impact of sustained low oil prices on the global economy.
Agenda:
1. What is Inflation.
2. Real life example
3. Causes of inflation
4. Effects of inflation on economy
5. Control Mechanism for inflation
6. Recent and past Inflation rate of Bangladesh
7. Reasons of inflation and measures taken to control inflation in
Bangladesh.
Inflation in Bangladesh and its Impact on Economic GrowthAkib Al Adib Pranto
The document discusses inflation trends in Bangladesh from 2012-2017. Some key points:
- Inflation in Bangladesh averaged 6.60% from 1994-2017, with a high of 10.21% in September 2011 and low of -0.03% in December 1996.
- In September 2017, Bangladesh's inflation rate was 5.45%. Food inflation has generally been higher than non-food inflation.
- Inflation reduces purchasing power and national savings, while also raising import prices and discouraging investment. Both demand-pull and cost-push factors can cause inflation.
- Monetary and fiscal policies can help control inflation in the short-run, while supply reforms and workforce changes aid
The document summarizes how monetary policy works to influence interest rates and aggregate demand. The Federal Reserve uses open market operations and the money supply to target a federal funds rate, thereby affecting investment, GDP, and inflation in pursuit of price stability and full employment. While the Taylor Rule provides a model for predicting interest rate decisions, central banks now focus on inflation targeting by announcing and aiming to hit a specific inflation target.
Topics discussed by Dr. Peter Linneman:
- Does it all come to an end if interest rates rise?
- Is a recession just around the corner? What warning signs should we look for?
- What does the new Administration and Congress mean for real estate and the economy?
- Audience questions
- And more!
1. The document discusses the differences between the short run and long run in macroeconomics, with the short run being when prices do not change much and the long run being when prices have fully adjusted.
2. It explains how wage and price changes can move the economy from a recession or boom in the short run back to full employment in the long run through shifts along the aggregate supply curve.
3. The document also covers how monetary policy can be used to speed up the adjustment process but may lead to higher price levels.
This monthly briefing highlights how the world economy is struggling to gain momentum, emerging economies facing policy dilemma in trying to stabilize currencies and the G20 meeting making a call for new measures to lift growth and create jobs.
For more information:
http://www.un.org/en/development/desa/policy/wesp/wesp_mb.shtml
This document discusses the long-term implications of fiscal policy, including deficits and public debt. It explains that discretionary fiscal policy can be used to stabilize the economy in the short-run through expansionary or contractionary policies. However, long-term effects include impacts on the budget balance, debt, and implicit liabilities like Social Security. Running large deficits risks increasing debt levels to a point where a government may default or need to resort to inflation. Governments aim to balance budgets over the business cycle to avoid these problems.
The document discusses inflation in Bangladesh. It defines inflation as a sustained increase in prices or fall in the value of money. Inflation occurs when currency levels exceed production levels. The document outlines types and causes of inflation including demand-pull and cost-push factors. Effects of inflation are also examined along with methods to control inflation such as monetary and fiscal measures. Current inflation rates in Bangladesh and other SAARC countries are presented.
3 Jan 2009: a bottom in breakevens, commodities, and global yields?Laeeth Isharc
The response of the authorities has been without precedent - the US has a new president, and perhaps confidence in the new administration may stave off the worst consequences of the epidemic contagion of fear - for now, at least. It is certain that for the time being we shall avoid the 29-33 collapse that was associated with every sovereign issuer in Europe except Britain, and much of Latin America and Asia defaulting as well as large numbers of banks in the US (in the days before deposit insurance).
The document provides an overview of the gold market as of June 4, 2021. It covers inflation rates, federal debt levels, gold news and analysis, and the gold price and chart. Inflation unexpectedly surged in April to twice the Fed's target, which could pose upside risks to more persistent inflation if expectations become unanchored. Higher inflation would increase demand for gold as a hedge. However, gold may struggle if interest rates rise in response. The document analyzes factors that could keep inflation elevated and impact the gold market.
Gold may rise as market euphoria about economic recovery ends. While strong GDP growth is expected in the short term due to base effects and stimulus, optimism may be exaggerated, unemployment remains elevated, and risks remain from virus variants. Inflation is already above the Fed's 2% target according to official data, and likely even higher using alternative measures, but the Fed says price increases will be temporary. However, inflation could be more persistent given money supply increases, government spending, and pent-up demand as the economy reopens. Higher inflation would be bullish for gold as an inflation hedge.
The document provides an overview of macroeconomic policies and concepts including:
1) It discusses the business cycle and macroeconomic equilibrium and how disturbances can cause instability.
2) Keynes argued that government intervention is necessary to address inherent instability in free markets. Fiscal and monetary policies can be used to stimulate aggregate demand.
3) Supply-side policies aim to shift aggregate supply curves by incentivizing production. Both demand and supply factors influence macroeconomic outcomes like growth, unemployment and inflation.
Will RBI rate cut keep inflation under check in 2015?IndiaNotes.com
While RBI has begun the rate cut cycle, plenty of headroom for further cuts would be generated going forward as low inflation would be the defining feature of 2015.
In this paper we analyze the evolution of Brazilian inflation under the inflation targeting
system from a cost-push perspective. We identify the main features of three quite distinct
phases (1999-2003, 2004-2009 and 2010-2014) and explain them in terms of tradable
price trends in local currency, changes in the dynamics of monitored prices and behavior
of wage inflation. We conclude that the trend towards continuous nominal exchange rate
devaluation after mid-2011, together with the strengthening of the bargaining power of
workers and the trend of rising real wages since 2006, means that distributive conflicts in
Brazil are getting much more intense. We also suggest that the apparently very irrational
recent (early 2015) change in the orientation of economic policy towards contractionary
fiscal, incomes and monetary policies in a stagnating economy seems to be ultimately
based on the desire to weaken the bargaining power of workers that was much
strengthened during the brief but intense Brazilian “golden age” of 2004-2010.
Obstacle Driven Development has the most comprehensive testing of any engineering process or method. Tests are created for each element of all stages of development.
This presentation shows the various models of Obstacle Driven Development methods and processes. Numerous models, including 3D versions, have been created to help understanding and solve obstacles.
Models range from the simple to the complex with simple 4 stage models to full flowcharts explaining the method and process.
There are 4 key factors that influence a country's economic growth and Gross Domestic Product: investment in human capital through education and training; investment in capital goods like factories, machinery and technology; natural resources available within the country; and entrepreneurship. Nations that invest in these areas will have a more productive workforce and be able to produce more goods and services, leading to higher GDP and economic growth.
Economic growth is measured by the increase in goods and services produced over time within an economy. It requires expansion of the labor force, capital, trade, and consumption. Economic growth has been a key objective of India's planning efforts since independence. Multiple socio-economic factors influence economic growth, including economic drivers like natural resources, human capital, investment and entrepreneurship as well as non-economic factors such as social institutions, political stability, and demographics. Proper management of resources and supportive social and political conditions are necessary to maximize economic growth.
This document discusses how economic growth is measured and the factors that influence it. It explains that a country's gross domestic product (GDP) measures economic growth and is the total value of goods and services produced in one year. The four main factors that determine a country's GDP are natural resources, human capital, capital goods, and entrepreneurship. Investing in education, health, and skills training improves human capital and standard of living.
This document summarizes John Williams' speech about the current economic conditions and outlook for monetary policy. Some key points:
1) The economy has strengthened, with GDP and job growth picking up. However, unemployment remains above typical estimates of its natural rate and inflation below the Fed's 2% target.
2) The Fed has begun tapering its asset purchase program but monetary policy remains highly accommodative. Interest rates will stay near zero until unemployment falls further.
3) The Fed has tools like interest on reserves and reverse repos to manage the large balance sheet and control interest rates during normalization of policy. Any rate increases will be gradual and clearly communicated.
BU 701Professor Linda MeltzerAssignment # 1Summe.docxhartrobert670
BU 701 Professor Linda Meltzer
Assignment # 1 Summer 2015
Topic: The Fed's Impact on the Financial Markets
Due Date: June 11th
In Module 2, we are focused on the Federal Reserve: its organzation, its main role, goals and targets, and its tools. For this assignment, you will look for and review:
· Latest FOMC Federal Open Market Committee, the policy making body of the Fed) minutes which is a detailed transcript of what happened at the last Fed meeting, and staff and Governor's outlook for financial markets, economy and future expectations. The latest minutes as of now is from April 28-29 meeting and was released in May. Many ways to find it. Make sure you look at whole transcript and not the summary.
· Find latest speech or comments made by Chair Yellen AFTER the meeting in April. She speaks frequently and CNBC picks up her comments so should be very easy to find. Also, find what analysts have said about Yellen's comments.
In a 1-2 page writeup, discuss:
1) key economic conditions that the FED is looking closely at and its significance to their policy as to whether they are going to raise interest rates in 2015;
2) From your reading of the material, how does the FED's action impact financial markets (bonds, stocks, money markets);
3) Has Chair Yellen's recent comments (and feel free to explore other members of the FED eg Gov. Brainerd who has spoken to CNBC other day) changed from last meeting? How?; and
4) You can use any opinions written by financial experts (you can find their analysis on CNBC, CNN, Marketwatch et al) just make sure to footnote or provide sources.
Note: As this is a writing intensive class, please take care with writing grammatically correct, capitalize where needed, and full sentences. No slang.
Grading Guide: Clinical Assessment in Mental Health Centers Newspaper Article
PSYCH/655 Version 2
1
Grading Guide
Clinical Assessment in Mental Health Centers Newspaper Article
This assignment is due in Week Six.
Content
60 Percent
Points Earned
X/6
· Discusses issues with culturally informed assessments
· Discusses issues with assessments of addiction and substance abuse
· Discusses issues with custody evaluations
Comments:
Organization and Development
20 Percent
Points Earned
X/2
· The paper is 1,000 to 1,250 words in length.
· The paper is clear and organized; major points are supported by details, examples, or analysis.
· The tone aligns with the assignment’s purpose and is geared toward the appropriate audience.
· The paper provides relevant and sufficient background on the topic.
· The paper is logical, flows, and reviews the major points.
Comments:
Mechanics and Format
20 Percent
Points Earned
X/2
· The assignment file is presentable and functional.
· Rules of grammar, usage, and punctuation are followed; spelling is correct.
· The paper—including the title page, reference page, tables, and any appendices—is consistent with APA guidelines.
Comments:
Additional Comments:
Total Earned
X/10 ...
Business cycles occur due to disturbances that push an economy above or below full employment. Recessions can be caused by substantial cuts in government or consumer spending, while booms can be generated by surges in public or private spending. Monetary policy, by influencing money supply and interest rates, can also produce booms or recessions by affecting consumer and business spending levels. Historical evidence shows that monetary factors, such as financial panics, interest rates, and monetary contractions have been major causes of business cycle fluctuations.
This white paper proposes tax reforms to promote economic growth and equity in the United States. It summarizes that the current US economic situation features high unemployment, stagnating incomes, and extreme inequality. The author argues corporate and personal income tax reforms could help address these issues by raising revenues to invest in the economy while reducing inequality. The paper outlines principles for tax reform and specific proposals, including increasing taxes on corporations and high incomes, closing loopholes, reforming estate taxes, and implementing environmental taxes. The goal is for taxation reforms to strengthen the economy, improve distribution, and encourage socially beneficial behavior.
DB2
7 Economic Policy Challenging Incrementalism
Incremental and Nonincremental Policymaking
Traditionally, fiscal and monetary policies were made incrementally; that is, decision makers concentrated their attention on modest changes—increases or decreases—in existing taxing, spending, and deficit levels, as well as the money supply and interest rates. Incrementalism was especially pervasive in annual federal budget making. The president and Congress did not reconsider the value of all existing programs each year, or pay much attention to previously established expenditure levels. Rather last year’s expenditures were considered as a base of spending for each program, attractive consideration of the budget proposals focused on new items or increases over last year’s base.
But crises often force policymakers to abandon incrementalism and reach out in non-incremental directions. In economic policy, the president and Congress and the Fed are pressured to “do something” in the face of a perceived economic crisis, even if there is little consensus on what should be done, or even whether there is anything the federal government can do to resolve the crisis. As we shall see later in this chapter, the recession that began in 2008 caused policymakers to search for new policies and make dramatic changes in spending and deficit levels and to undertake unprecedented measures to prevent the collapse of financial markets and avoid a deep recession.
Fiscal and Monetary Policy
Economic policy is exercised primarily through the federal government’s fiscal policies—decisions about taxing, spending, and deficit levels—and its monetary policies—decisions about the money supply and interest rates.
Fiscal policy is made in the annual preparation of the federal budget by the president and the Office of Management and Budget, and subsequently considered by Congress in its annual appropriations bills and revisions of the tax laws. These decisions determine overall federal spending levels, as well as spending priorities among federal programs. Together with tax policy decisions (see Chapter 8), these spending decisions determine the size of the federal government’s annual deficits or surpluses.
Monetary policy is the principal responsibility of the powerful and independent Federal Reserve Board—“the Fed”—which can expand or contract the money supply through its oversight of the nation’s banking system (see “The Fed at Work” later in this chapter). Congress established the Federal Reserve System and its governing Board in 1913 and Congress could, if it wished, reduce its power or even abolish the Fed altogether. But no serious effort has ever been undertaken to do so.
Economic Theories As Policy Guides
The goals of economic policy are widely shared: growth in economic output and standards of living, full and productive employment of the nation’s work force, and stable prices with low inflation. But a variety of economic theories compete for preeminence as ways of achiev.
This document discusses the relationship between economic growth and unemployment rates. It finds that a persistently high unemployment rate remains a concern for Congress. While the unemployment rate has declined since peaking in 2009 and 2010, it remains elevated by historical standards. The key driver of unemployment over the long run is the rate of economic growth compared to potential growth. For unemployment to significantly decline, growth needs to outpace the combined growth of the labor force and productivity. Recent recoveries, including from the 2007-2009 recession, have seen slow declines in unemployment, described as "jobless recoveries."
Module 2 Lecture - GDP A Measure Of Total Production And Income (.docxkendalfarrier
Module 2 Lecture - GDP: A Measure Of Total Production And Income (cont'd)-2
Using Real GDP To Measure Our Standard of Living
A common method for measuring the standard of living in the US involves comparing per capita Real GDP (that’ total gross domestic product divided by the population) from the present to some pre-determined past year. Table 14.4, pg. 383 shows the per person Real GDP from 2016 as compared to the per person Real GDP in 1960. From looking at that table it appears the US has done very well, increasing from $17,217 per person in 1960 to $56,200 per person in 2016. This isn’t the whole story, however.
Potential GDP
Potential GDP is the level of real GDP per person when all factors of production (land, labor, capital, entrepreneurship) have been utilized to their fullest. This would be the productivity goal of the US economy. If some of these factors are underutilized or underemployed, real GDP is producing below its potential. Think of the loss of productivity with high rates of unemployment or large tracts of land that are used only occasionally (football and baseball stadiums or public schools which lie vacant during 3 months of vacations). The only way to get a true look at how well the US economy is doing is to look at its production levels in past years and compare them with the full potential of production of which the US economy is capable. Figure 14.3, pg. 384 which I’ve reproduced for you below, gives us a pretty clear picture of how well the US has achieved its production potential since 1960.
Follow the red line upward from 1960 and especially note how much it lies above or below the black line. The red line represents Real GDP per person. The black line represents the actual potential of productive output per person.
Note that the red line rises above potential from 1960 to about 1970. The potential productive output per person was actually rising at about 2.8% per year.
Since 1970 the red line is either on or well below the black line (except for two minor rises). Real GDP per person has fallen below the economy’s potential. It actually shows a growth rate of only about 1.9% a year since 1970. This means that the economy’s POTENTIAL GDP has fallen well below that of 1960.
If the economy had kept up with the 1960’s rate of growth in production it would mean a cumulative effect (from 1960 to 2013) of about $406,000 added income/productivity per person. This is one of the more compelling reasons behind the emphasis on not just per capita (per person) Real GDP but also its comparison to POTENTIAL GDP. Wouldn’t it have been nice to have an extra $400,000 over a span of 40 years (1970-2010)? That’s an extra $10,000 a year; serious added income.
Why Does Real GDP (levels of production and income) Increase Positively Some Years And Then Become Negative In Other Years?
The Business Cycle: this is a term used to describe fluctuations in economic activity. In a sense, it measures the economic growth during the expa.
- The document discusses the recent volatility in global stock markets and the fear that has gripped investors. While there are valid economic concerns, fear has become contagious and may be overstating the risks.
- The US economy has held up better than expected so far in 2016, with steady job growth and consumer spending. However, tightening financial conditions have led to declines in stock valuations.
- Central banks are again trying to ease financial conditions through further monetary stimulus in order to support the economy and stabilize markets, though investor faith in their actions may be waning.
Question 1Response 1Development inside and out effects t.docxaudeleypearl
Question 1:
Response 1:
Development inside and out effects the entire country's economy. It impacts the managing body, regardless the clearly irrelevant subtleties in the average person's dependably life. Both a conditions and clear deferred results of how the economy is getting along, swelling has the two its fans and spoilers. Distinctive envisions that particular degrees of swelling are helpful for a prospering economy, yet that progressively critical rates raise concerns. It can degrade the money basically and, at logically lamentable, has been a key part to subsidences.
Swelling, as referenced, is the rate a worth ascensions, and fundamentally how much the dollar is worth at a given moment concerning checking. The idea behind swelling being an impact for good in the economy is that a reasonable enough rate can nudge financial movement without debasing the money so much that it ends up being basically vain (Kohn, 2006).
Swelling can in like manner falter from asset for asset. Subordinate upon the season, the expense of gas could go up independently from with everything considered headway as it routinely does as summer moves close. In reality, there is even a term - focus improvement - for swelling that parts in everything except for sustenance and imperativeness (gas and oil), as these regions have separate factors that add to them. There are a wide degree of sorts of swelling, subordinate upon what remarkable is being viewed comparatively as what the development rate truly is by all accounts. For example, what happens if the swelling rate is well over the Fed's normal goal? At a higher rate, yet still in the single digits, that is known as walking swelling. It is seen as concerning yet sensible (Ball, 2006).
Swelling is generally depicted reliant on its rate and causes. By and large, Inflation happens in an economy when vitality for thing and experiences outmaneuvers the supply of yield. in this manner, clarifications behind Inflation have different sides, the intrigue side and supply side. The widely inclusive activity of hazard premiums in driving enlargement pay over the scope of advancing years is dependable with secured budgetary improvement and inside and out oblige cash related procedure events in the moved economies. The degree for further fitting budgetary enabling seen with money related stars seems to have declined amidst the enough low advance charges and gigantic monetary records of national banks (Bodie, 2016).
In relentless time, the correspondence of perils has wound up being constantly phenomenal, the general point of view has lit up, and money related conditions have engaged on net. With the work superstar proceeding to reinforce, and GDP improvement expected to keep up a vital good ways from back in the consequent quarter, it likely will be fitting soon to change the affiliation supports rate. Likewise, if the economy propels as shown by the SEP concentrate way, the affiliation supports rate will probably app ...
This document summarizes views on the current economic environment and changing real estate investment strategies from a roundtable discussion among investment professionals. There is consensus that the recession has been long and deep, and recovery will be slow. Most see low but positive GDP growth in the near term and expect unemployment to gradually decline. Regarding real estate, opportunities exist for core property investments given attractive cap rates and income returns. Strategies are shifting toward core and value-added deals with a focus on current income over total returns.
Olivier Desbarres - Hawkish Pendulum May Have Swung Too FarOlivier Desbarres
I have long argued that the risk of a collapse in global economic growth and inflation was over-stated and more recently that major central banks had likely reached an important inflexion point.
A global recession and global deflation have seemingly been averted and central bank policy rate cuts and extensions of quantitative easing programs have become rarer occurrences.
Donald Trump’s election has turbo-charged expectations that reflationary US-centric policies will drive global, and in particular US growth and inflation in 2017, that the Fed’s hiking cycle will step up a gear and that US yields and equities and the dollar will climb further, heaping pressure on emerging economies and asset prices.
But analysts and markets may now be getting ahead of themselves.
My core reasoning is that US inflation may not rise as fast expected, due to lags in the implementation of Trump’s planned fiscal policy loosening and immigration curbs, residual slack in the US labour market and disinflationary impact of higher US yields and a stronger dollar.
As a result, the FOMC, which will see important personnel changes in early 2017, may argue that the market has already done some its work and not be as hawkish as expected.
In this scenario, US short-end rates could lose ground while long-end rates continue to push higher, resulting in a steepening of a still not very steep US rates curve.
One corollary is that factors which have wakened the euro may lose traction as 2017 progresses.
This document discusses inflation in Bangladesh over several chapters:
1. It provides background on inflation, defining it as a sustained increase in general price levels. The main causes are seen as demand-pull (too much money chasing too few goods) and cost-push (increased costs passed on to consumers).
2. Inflation in Bangladesh has recently increased, prompting the central bank to tighten monetary policy. However, inflation is also driven by non-economic factors like profiteering and lack of price monitoring.
3. Charts show Bangladesh's inflation rate averaged 6.65% from 1994-2016, reaching a high of 16% in 2011 and low of -0.03% in 1996,
Over the past thirty years the neutral real interest rate across developed economies has declined substantially. Evidence suggests that secular rather than transitory factors are driving its decline. A lower neutral interest rate implies that the cumulative amount of tightening required for monetary policy to become neutral is much smaller than previously thought.
The document discusses whether the US economy has truly recovered from the Great Recession. While GDP and corporate profits have increased since the recession, the author argues that the quality of life for most Americans, especially the bottom 99%, has not significantly improved or has deteriorated. Unemployment rates only consider those actively looking for work and do not account for discouraged workers, and labor participation is at a 38-year low. The author believes inequality has increased and many Americans remain unemployed or underemployed, indicating the economy has not fully recovered for most.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
This document summarizes the Chief Economist's discussion of policy challenges facing the global economy in areas such as monetary policy, fiscal policy, and growth. It notes that while policymakers have successfully managed the crisis, challenges remain in areas like withdrawing monetary stimulus, reducing government debt, and rebalancing global growth. Overall economic growth is expected to be slow over the next few years. Coordinated, realistic policies across many levels will be needed to avoid future crises and promote sustainable growth.
The document discusses the high unemployment in the US and debates the causes. It considers whether the problem is low aggregate demand or supply-side issues. While stimulus measures aimed at boosting demand helped prevent a worse downturn, continued government spending and regulatory uncertainty have increased household savings and made businesses reluctant to invest. A key factor prolonging unemployment is job losses in construction following the housing boom, which will be hard to replace and accounts for up to 3% of total unemployment. Rather than constantly boosting spending, a more sustainable approach is to retrain and reskill the unemployed.
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
Assessment and Planning in Educational technology.pptxKavitha Krishnan
In an education system, it is understood that assessment is only for the students, but on the other hand, the Assessment of teachers is also an important aspect of the education system that ensures teachers are providing high-quality instruction to students. The assessment process can be used to provide feedback and support for professional development, to inform decisions about teacher retention or promotion, or to evaluate teacher effectiveness for accountability purposes.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
বাংলাদেশের অর্থনৈতিক সমীক্ষা ২০২৪ [Bangladesh Economic Review 2024 Bangla.pdf] কম্পিউটার , ট্যাব ও স্মার্ট ফোন ভার্সন সহ সম্পূর্ণ বাংলা ই-বুক বা pdf বই " সুচিপত্র ...বুকমার্ক মেনু 🔖 ও হাইপার লিংক মেনু 📝👆 যুক্ত ..
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তাই একজন নাগরিক হিসাবে এই তথ্য গুলো আপনার জানা প্রয়োজন ...।
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How to Add Chatter in the odoo 17 ERP ModuleCeline George
In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
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Executive Directors Chat Leveraging AI for Diversity, Equity, and InclusionTechSoup
Let’s explore the intersection of technology and equity in the final session of our DEI series. Discover how AI tools, like ChatGPT, can be used to support and enhance your nonprofit's DEI initiatives. Participants will gain insights into practical AI applications and get tips for leveraging technology to advance their DEI goals.
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
Factors economic growth
1. FACTORS IN ECONOMIC GROWTH
Raymond J. Saulnier
Professor of Economics
Barnard College, Columbia University
Few economic questions have been so continuously in the fore-
front of public discussion in the United States in recent years as
our rate of economic growth and how best to accelerate it. During
much of the 1950's and particularly in 1959-60 it well-nigh
monopolized attention when economic matters were under discus-
sion. Even though interest has tended to lag of late, considerations
of economic growth and how to increase it continue to be more or
less governing in public policy matters.
Many examples of policy decisions that have been shaped with
the growth issue primarily in mind could be cited. The outstanding
example is the tax reduction program which the Ways and Means
Committee has had under consideration for over six months. As
you know, this is being urged by its advocates on the ground that
it will produce such a high growth rate that the increment to federal
receipts will not only counterbalance the projected loss of revenue
from lower rates and the large annual additions currently being
made to federal expenditures but will also help reduce our 9 billion
dollar budgetary deficit.
The reasons why considerations of economic growth have been
accorded so much prominence are not hard to identify. After all,
to say we should strive to achieve a faster rate of economic growth
is to say that we should strive to achieve a better economic per-
formance, and surely this is a purpose which everyone shares.
Beyond that, and more specific, has been the view that we have to
grow faster in order to keep ahead of the Russians. Considerable
interest is still shown in this contention, though nothing like the
total preoccupation with it that was so evident in 1959-60. At that
time it was pointed out a million times if it was pointed out once
that we were growing only 2.7 percent a year while the countries
of Western Europe were growing about 5 percent a year and the
Russians were growing at a 7 percent rate. You might want, as I
would, to take exception to these figures, but the fact is that they
were widely used to make the point that if we did not accelerate
our economic growth rate, we would not only fall behind Western
Europe but the Russians would soon overtake us. Moreover, Chair-
man Khrushchev added a gruesome note by promising some day
to bury us.
5
2. Since Mr. Khrushchev made that promise the edge of his threat
has been dulled somewhat. He has been good enough personally to
point out that when he speaks of burying us he does not mean that
shovels will be used. He assures us that the whole thing is to be
understood merely as a matter of systems in conflict. More impor-
tant, however, have been the widespread failures not only in the
Russian agricultural program but, notwithstanding their advances in
space, in their industrial programs as well. And no one has been
more candid in discussing them than Mr. Khrushchev himself, when
he is talking to the Russians. The 7 percent claim is difficult to
maintain in the face of economic news such as has recently been
coming out of the Soviet Union.
Fortunately, for these and for other reasons the growth issue
is seen in somewhat better perspective today than it was in 1959-60.
We nowadays think of bettering our economic performance, not in
terms of keeping ahead of the Russians, but in terms of solving a
problem which is just as acute today as it was in the 1950's, namely,
the tendency for unemployment in our own economy to run sub-
stantially above a reasonable minimum.
I am sure you realize also that purely political reasons underlie
part of this interest in economic growth. Unfortunately, the growth
issue is ideally suited to partisan political use and it has virtually
been politicked to a fare-thee-well. Failure to recognize that growth
has frequently been used for political purposes would be dangerous
no less than naive.
However, the fact that economic growth as an issue has fre-
quently been used for political purposes does not diminish in the
least the importance of improving our economic performance. Let
me turn, therefore, to a discussion of the factors that determine the
growth rate. I think you will see evidence of wide areas of agree-
ment on what constitutes the sources of growth. The disagreements
have to do mainly with the question of how to accelerate it.
SOURCES OF GROWNTH
Although it is far from an entirely satisfactory method, economic
growth is most commonly measured in terms of the annual increase
of constant price gross national product (real national product).1
We may, therefore, identify the factors that influence our rate of
1
For an interesting and important statement on alternative standards and measure-
ments of economic growth, see the article by Clayton Gehman in the Federal Reserve
Bulletin for August 1963. Also, for an earlier heretical view, see Colin Clark's
pamphlet, Growthmanship, published in 1961 by Barrie and Rockliff for the Institute
of Economic Affairs, London, England.
6
3. economic growth by considering what factors cause an increase
in GNP.
This question may be viewed in many ways, but a useful view is
that an economy's output is equal to the amount of work done, that
is, to the number of man-hours worked, times average output per
man-hour worked. The utility of this approach is that it forces us to
organize the factors in economic growth into two distinct categories
-first, the determinants of the volume of man-hours worked and,
second, the determinants of output per hour worked. Obviously,
in brief remarks such as these all determinants of growth in both
of these broad categories cannot be identified, much less described
in full detail. But we can at least identify the major factors."
Factors Affecting Man-Hours Worked
Factors that affect the volume of man-hours worked, or the
amount of labor input, include the size and age distribution of
population; the extent to which people choose to participate in the
labor force; the average length of the work week and of the work
year; and the amount of unemployment.
You will note that all of these are factors that change over time,
in most cases in a fairly regular trend. What is more, their trends
are such that they do not all pull in the same direction, and some
of the trends that pull against economic growth are nonetheless
regarded as among the brightest achievements of our economy.
Thus, our population is rising, which is favorable to growth, but
until recently the age distribution, with increasing proportions in
the younger and the older age groups, has been exerting an opposite
pull. The age distribution trend is being altered now, as those in
the younger age groups are entering the labor force, which is a
major factor in the expectation of more rapid growth in the second
half of the present decade.
Second, the tendency has been for the average length of the work
week to shorten and for lengthened vacations to reduce the number
of weeks worked per year.' Except to the extent that periods of
'The point of view from which this paper is written is that the sources of long-
term growth are to be found in the economy's supply of "real" resources. To the
extent that demand factors affect resource supplies (which is significant but easily
overrated), they can affect growth. However, over any appreciable period of time,
growth depends basically on the increase and improvement in real resources and on
the real factors that generate these increases and improvements rather than on the
degree of utilization of existing resources. In this point of view the question whether
aggregate demand is best bolstered by fiscal or monetary measures, for example, is
of secondary importance, at most.
3References to changes in the average length of the work week are to changes in
the number of hours on the job, not to changes in the base-pay period.
7
4. rest make people more productive when they are at work, which is
a consideration not to be ignored, this trend works against the rate
of economic growth. Paradoxically, however, we regard the shorter
work week and longer and more frequent vacations as achievements,
and properly so. Indeed, in labor contract negotiations nowadays
longer vacations and a shorter work week are frequently on the
same level with increased wages as an employment benefit. Not-
withstanding these facts, the trend toward shorter hours that has
prevailed in the United States over much of our industrial history
has more or less continuously dampened the rate of economic
growth.
Finally, the trend toward earlier retirement tends to reduce the
growth rate, though it, too, is properly welcomed as an improvement
in our economic performance and in our level of living.
A distinction should be drawn between factors that enhance an
economy's growth rate and those that merely raise the volume
of output from one level to another without affecting the economy's
capacity to increase its output continuously over time.
Clearly, the volume of our economy's output is increased, other
things equal, but a reduction in unemployment. If we were, for
example, to cut unemployment by about 50 percent, from 6 percent,
say, to 3 percent thus employing 97 percent of our labor force
rather than only 94 percent, we might achieve a GNP increase of
something like 2.5 percent. But, once that has been achieved, we
would have to all intents and purposes exhausted the possibility of
increasing output by this means. Thus, while reduction of employ-
ment is obviously desirable, it cannot be regarded as a way of
accelerating the economy's growth rate as a continuing thing. Of
course, if unemployment is high and the absorption of unemploy-
ment is extended over a fairly long period, it may have the same
appearance as an improvement in the growth rate but at some point
its beneficial effect will be exhausted. A trend toward higher levels
of unemployment can, of course, have a more drastic and extended
effect in depressing the growth rate.
Finally, you will see without my spelling out the details that a
reduction in underemployment-that is, when a person is at work
but could be most productive in another job-because it is doubtless
more pervasive in our economy than is unemployment, provides
important opportunities for raising our growth rate over extended
periods.
Factors Affecting Output per Man-Hour
Prominent among factors that govern the level of productivity
at any point in time are the volume and quality of the natural
8
5. resources available to the economy, including not only such natural
resources as the soil, the mineral deposits available for our use, and
other such assets, but also the physical climate within which
economic activity is conducted. As the geographer Huntington
pointed out a long time ago, it is no accident that the world's major
economic and industrial achievements have occurred largely within
the confines of the temperate zone.
Productivity is affected also by the amount and quality of the
man-made resources, or capital, with which labor is equipped in the
production process. This, in turn, depends on the community's
ability and willingness, one way or another, to save.
Finally, the qualities of labor itself make for high output: its
skill, its industriousness, its ability and willingness to work con-
structively together, and its sobriety.
Then we have the factor which, in economics, we often call the
state of the arts or the state of technology. Its importance as a
source of growth is exceptional because improvements in technique
are the major source of improvements in productivity over time as
distinct from the level of productivity at any point in time. We
could say a great deal about this as a factor in productivity and in
growth, but I can cover only a small fraction of it in these remarks.
Part of the story has to do with the way work is done. You know
that achieving a high level of efficiency depends in good part on
finding the best way to do the job and being able and willing to
do it that way. Sometimes this is simply a matter of organization;
sometimes it involves the use of very subtle and sophisticated
methods or techniques of production, in which all our knowledge
about the sciences of energy and of matter are brought into play;
sometimes it is a case of changing conventional practices or thinking
or somehow breaking vested interests in inefficiency.
The roles of the physical sciences and of technology are, of
course, paramount in achieving high productivity, but we must
not overlook the arts of business management. Clearly, we can
achieve our optimum performance as an economy only when the
productive capabilities of our human and material resources are
used to their maximum. This is partly a question of getting people
into the right jobs and of organizing their work in the most effective
manner; and it is partly a question of selecting and organizing capi-
tal equipment and directing its use so that we make the most, in
any given state of knowledge, of the available capital resources.
This is the task of management.
Productivity achievements are affected also by the prevailing
9
6. economic system. In some economic systems the tasks of organiza-
tion are performed through a centralized planning agency. I have
seen this at work in the Soviet Union and elsewhere and I can say,
without hesitation, that it has grave weaknesses. In our economy,
resources are allocated through a market process in which short-
term and long-term considerations of cost, revenue, and profit,
judged by the individual firm, govern the use or allocation of
resources. Our economy's success in maximizing output per unit of
labor employed naturally depends in good part on how well that
market process works.
We favor this market system for a thousand reasons and not
only because it has given us the world's best level of living. We
favor it also because it affords assurances of freedom and inde-
pendence in political, social, and cultural matters that no other
type of economic system can provide. We keep our system operating
efficiently when we keep it open, fluid, and competitive, with
minimal obstacles to the movement or altered use of people, finan-
cial capital, and physical resources. And we should remind ourselves
that the most efficient allocation of resources in an economy must
be construed not just in a national but in an international sense.
The economic system that works best is the economic system that
permits, through the free international movement of people, goods
and services, and financial capital, the most efficient use of all a
nation's resources.
A whole collection of noneconomic or only semieconomic fac-
tors-some institutional in the sense they are imbedded in our
customary way of doing things; some legal and some psychological,
and some in a sense spiritual-also have a critical bearing on the
performance of our economy.
MEANS OF ACCELERATING ECONOMIC GROWTH
Other things equal, population growth means economic growth
and we can, accordingly, speed up the rate of economic growth if,
with the stated proviso, population grows more rapidly. As I stated
earlier, this is a major factor in the hopes for a higher rate of
economic growth in the second half of this decade. But this does
not necessarily raise per capita output, which should, of course,
be our objective.
Also, we could increase the rate of economic growth, for a time
at least, by raising the rate of labor force participation or by in-
creasing the average length of the work week, though in most
cases these methods would be unacceptable for reasons already
stated. While reduction of unemployment and fuller use of pro-
10
7. ductive capacity are desirable, measures to this end must be re-
garded as ways of raising economic output, once and hopefully for
all, to a higher level rather than as ways of continuously increasing
output. The effective means for improving our economic per-
formance, in the sense not only of achieving continuing increases
in the economy's annual output but of speeding up the pace of these
advances, is by increasing the rate at which we are improving
productivity.
A good many ways of improving productivity will become ap-
parent at once. Productivity can be improved through a more
efficient use of natural resources and, to the extent that this is
possible, by the discovery of additional and more economical
resources. This latter point is one that the opponents of the deple-
tion tax allowances should note; it is also a point that should
encourage those who see opportunities for economic advance in
a more intensive exploration of the sea. Economic growth rates can
be accelerated also by the provision, through saving, of more
capital and by transforming available financial resources into better
tools and equipment. The same results can be achieved by improv-
ing methods of work and increasing efficiency in the application of
both labor and of capital. Finally, the rate of economic growth can
be accelerated by a better allocation of economic resources, so that
increasingly we improve our ability to get the most from available
resources.
If you ask yourself how we can accomplish these things, I am
sure you will see that at every turn education and research, which
is the business of the universities, emerge as the essential processes.
Actually, in education and research we find most of the answers to
the problem of how to achieve a good rate of growth and how to
accelerate it.
But this is not all of the story. We must be willing to put the
benefits of education and research into use. Discrimination in any
form which keeps skilled, talented, and educationally well-equipped
people from doing jobs for which they are fitted lowers the nation's
economic productivity. Also, productivity advances are blocked in
some countries by cultural and religious beliefs and habits. I am
sure it is also plain that obstacles to the introduction and use of
improved methods of production, such as resistance to automation,
impede the achievement of a faster rate of economic growth.
Much needs to be done, also, in improving the institutions of our
economic system if a faster growth rate is to be achieved. First, a
fast rate obviously requires a system or environment of work that
provides maximum incentives to effort. We cannot operate our
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8. economy without government services, and we cannot operate gov-
ernment services without raising revenues with which to pay for
them. But neither can we operate our economy at its best under
a tax system that lowers incentive to effort. Not only a graduation
of tax rates but a fairly steep graduation, can be defended on several
grounds, but a tax rate graduation can be carried too far. It can
be carried to the point where it discourages incentive and the
willingness to take risks. With an individual income tax rate gradu-
ated to 91 percent, as ours currently is, I think we could agree that
we have achieved this unfortunate result.
Second, any economic system that does not encourage innova-
tion has little chance of vigorous growth. How can we possibly
expect to enjoy the benefits of new methods of production if we
give no encouragement to their introduction? Providing this en-
couragement is partly a matter of maintaining an open competitive
system in which obstacles to entry into business, to the extension
of business into new lines, and to the introduction of new methods
of work for new products are minimal. It is partly also a matter of
keeping the channels of credit and capital open to all reasonable
risks and of applying to business concerns a tax system which per-
mits them to retain a reasonable proportion of their profits to
finance expansion of activity and to provide incentive for further
investment. For an economy such as ours, which depends on private
initiative and private effort for its achievement, a tax system which
places a near-confiscatory burden on medium and high-bracket
incomes, as ours does, and which takes more than half of the profits
made by business concerns, is clearly not compatible with attain-
ment of higher growth rates.
Third, we need to strengthen those features of our economy that
foster competition for many reasons. Competition discourages in-
efficiency and waste and penalizes it heavily. It comes as near as we
can come to affording a guarantee of efficiency. More than that,
competition means that economic resources will tend to be used
where they are at their maximum efficiency. Also, it provides an
environment in which innovation is possible.
These are by no means all of the factors involved. Government
has many opportunities for helping to achieve growth-such as
providing basic utilities and promoting the economy's stability-
but the most important of all is that it help create an environment,
an institutional and legal framework, favorable to growth.
But we would make a very grave mistake if we did not realize
that in our economy heavy responsibilities for promoting economic
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9. growth reside entirely outside the federal government. These are
the responsibilities of all of us as individuals, the responsibilities
of privately owned and managed business concerns, and the re-
sponsibilities of the leaders of business and labor and of government
at the state and local level. A statement of the range of these re-
sponsibilities will be found in President Eisenhower's last Economic
Report to the Congress, submitted in January 1960. '
REFERENCES
Employment, Growth, and Price Levels, Staff Report to the Joint Economic
Committee, Govt. Printing Office, Washington, 1959.
Simon Kuznets, Capital in the American Economy, National Bureau of Eco-
nomic Research, Princeton University Press, 1961.
Economic Report of the President, Janltary 1960, Chapter 1, "Economic Growth
in a Free Society."
Economic Report of the President, January 1962, Chapter 2, "Economic
Growth."
Dimensions of Soviet Economic Power, Joint Economic Committee, Govt.
Printing Office, Washington, 1962.
Edmund S. Phelps (editor), The Goal of Economic Growth, W. W. Norton
and Company, New York, 1962.
State of the Economy and Policies for Fill Employment, Joint Economic Com-
mittee (hearings), Govt. Printing Office, Washington, 1962.
Edward F. Denison, The Sources of Economic Growth in the United States,
Committee for Economic Development, New York, 1962.
Proceedings of a Symposium on Economic Growth, American Bankers Associa-
tion, New York, 1963.
Raymond J. Saulnier, The Strategy of Economic Policy, Fordham University
Press, New York, 1963.
4
See list of references on this page.
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