The main contents of this chapter include all of the following: Real business cycle theory, stabilization policy, figure: stabilizing a shift in aggregate demand, inflation shocks and the policy tradeoff, opportunities created by increased productivity, fiscal policy.
My interest in business cycles was rekindled by Professor Jim Ford, my mentor during the first part of my career at the University of Birmingham. Since completing my PhD on business cycles in 1983, my lecturing and research had focussed on money, banking and finance. Jim introduced me to Shackle’s much neglected work on business cycles, which is discussed in Chapter 4 and emphasises the key role bank lending decisions play in the propogation of business cycles.
Bài giảng "Kinh tế vĩ mô - Chapter 19: Advances in Business Cycle Theory" cung cấp cho người học các kiến thức: An overview of recent work in two areas, real business cycle theory, new keynesian economics. Mời các bạn cùng tham khảo nội dung chi tiết.
After reading this chapter, you should be able to: Describe the business cycle and its primary phases, illustrate how unemployment and inflation are measured, explain the types of unemployment and inflation and their various economic impacts.
This book grew out of my lecture notes for a graduate course in in-
ternational macroeconomics and Þnance that I teach at the Ohio State
University. The book is targeted towards second year graduate stu-
dents in a Ph.D. program. The material is accessible to those who have
completed core courses in statistics, econometrics, and macroeconomic
theory typically taken in the Þrst year of graduate study.
Chapter 6 - Understanding business cycles. This chapter describe the business cycle and its phases; describe the typical patterns of resource use fluctuation, housing sector activity, and external trade sector activity, as an economy moves through the business cycle; describe theories of the business cycle;...
After reading this chapter, you should be able to: Describe alternative perspectives on the causes of macroeconomic instability, including the views of mainstream economists, monetarists, real-business-cycle advocates, and proponents of coordination failures; explain what the equation of exchange is and how it relates to "monetarism"; discuss why new classical economists believe the economy will "self-correct" from aggregate demand and aggregate supply shocks; identify and describe the variations of the debate over "rules" versus "discretion" in conducting stabilization policy.
After reading this chapter, you should be able to: Describe alternative perspectives on the causes of macroeconomic instability, including the views of mainstream economists, monetarists, real-business-cycle advocates, and proponents of coordination failures; Explain what the equation of exchange is and how it relates to "monetarism"; discuss why new classical economists believe the economy will "self-correct" from aggregate demand and aggregate supply shocks.
C H A P T E R T W E N T Y - O N E
Interwar Monetary and Business Cycle Theory: Macroeconomics before Keynes
According to Francis X. Diebold, “A striking and easily forgotten fact is that, before Keynes and Klein, there really was no macroeconomics” . But the rich and varied traditions of monetary and business cycle theory forming the context
Frank: According to this economist, Ernie, it’s all very simple.
In an endogenous business cycle where variable-span diffusion indices are neither rising nor falling and the capital-to-output ratio is low, then the interplay of liquidity preferences and reserve ratios escalates and interest rates rise, causing the yield ratio to drop on common stocks.
The publication date of Business Cycles proved singularly unfor-
tunate. Had it appeared three years before Keynes's General Theory
sent economists scurrying off in other directions instead of three years'
afterwards, it would have gained from the enormous interest everyone
had in business cycles in 1933 and might have been accorded a recep-
tion second only to that later received by the General Theory itself. 5
Instead, it appeared just as the outbreak of World War II raised eco-
nomic problems to which Keynes's tools, but not Schumpeter's, could
be readily adapted.
Chapter 1 - Demand and supply analysis: Introduction. The focus of the reading is on demand and supply analysis (microeconomics): How are prices and quantities of transactions determined? The theory of the consumer deals with how consumers make choices, and the theory of the firm is how profit-maximizing firms make choices.
Models begin with many simplifications (e.g., assumptions), but then we evaluate the model by comparing the implications of the model with what we observe in the real world. After studying this chapter you will be able to understand: Why show this? Because some who read about consumer theory may be concerned about the unrealistic nature of the models and thus may get too involved in how unrealistic the model is. The focus should be on understanding consumer choice theory and then examining what happens if more realism is introduced.
Chapter 7 - Monetary and fiscal policy. This chapter compare monetary and fiscal policy, compare monetary and fiscal policy, explain the money creation process, describe functions and definitions of money, describe theories of the demand for and supply of money, describe the roles and objectives of central banks,...
Chapter 10 - Economic fluctuations, unemployment, and inflation. The topics discussed in this chapter are: Examine the business cycle, consider various business cycle theories, show how economic forecasting is done, measure the GDP gap, learn how the unemployment rate is computed look at the types of unemployment, construct a consumer price index, consider the theories of inflation.
Chapter 36 - Current issues in macro theory and policy. In this chapter, you will learn to: Describe alternative perspectives on the causes of macroeconomic instability, including the views of mainstream economists, monetarists, real-business-cycle advocates, and proponents of coordination failures; explain what the equation of exchange is and how it relates to "monetarism"; discuss why new classical economists believe the economy will "self-correct" from aggregate demand and aggregate supply shocks;...
Chapter 10 - Arbitrage pricing theory and multifactor models of risk and return. We begin by showing how the decomposition of risk into market versus firm-specific influences that we introduced in earlier cha pters can be extended to deal with the multifaceted nature of systematic risk. Multifactor models of security returns can be used to measure and manage exposure to each of many economy-wide factors such as business-cycle risk, interest or inflation rate risk, energy price risk, and so on.
After reading this chapter, you should be able to: Identify and explain the purposes, tools, and limitations of fiscal policy; explain the role of built-in stabilizers in moderating business cycles; describe how the cyclically-adjusted budget reveals the status of U.S. fiscal policy; discuss the size, composition, and consequences of the U.S. public debt.
Standard economic theory argues that international private capital flows will make a major contribution to development to the extent that they will flow from capital-abundant industrialized countries to capital-scarce developing countries, and help to smooth spending throughout the business cycle in capital-recipient countries. In recent years, reality has contradicted both aspects of this standard theory. For the last seven years, developing countries have transferred large amount of resources to developed countries.
The first-order effects of relaxed bank entry restrictions have been favorable, both within the U.S. and
across countries. Internationally, the benefits of foreign entry seem to depend on the level of
development, but at least for developing nations entrants are more efficient than incumbent banks and
the stiffer competition seems to improve overall bank efficiency. In contrast to these first-order effects,
the stability implications of increased entry are less obvious.