Unemployment and Phillips curve
|
|
- Isabella Green
- 5 years ago
- Views:
Transcription
1 Unemploymen and Phillips curve
2 2 of The Naural Rae of Unemploymen and he Phillips Curve Figure 1 Inflaion versus Unemploymen in he Unied Saes, 1900 o 1960 During he period 1900 o 1960 in he Unied Saes, a low unemploymen rae was ypically associaed wih a high inflaion rae, and a high unemploymen rae was ypically associaed wih a low or negaive inflaion rae. The Phillips curve, based on he daa above, shows a negaive relaion beween inflaion and unemploymen.
3 3 of Inflaion, Expeced Inflaion and Unemploymen e P P ( 1 ) F( u, z) The above equaion is he aggregae supply relaion derived in Chaper 7. This relaion can be rewrien o esablish a relaion beween inflaion, expeced inflaion, and he unemploymen rae. Firs, he funcion F, assumes he form: F( u, z) 1 u z Then, replace his funcion in he one above: P P e 1 1 ( )( u+ z)
4 4 of Inflaion, Expeced Inflaion and Unemploymen e P P ( 1 ) F( u, z) The appendix o his chaper shows how o go from he equaion above o he relaion beween inflaion, expeced inflaion, and he unemploymen rae below: e ( z) u
5 5 of Inflaion, Expeced Inflaion and Unemploymen According o his equaion: e ( z) u An increase in he expeced inflaion, e, leads o an increase in inflaion,. Given expeced inflaion e, an increase in he markup,, or an increase in he facors ha affec wage deerminaion, z, lead o an increase in inflaion. Given expeced inflaion, e, an increase in he unemploymen rae, u, leads o a decrease in inflaion,.
6 6 of Inflaion, Expeced Inflaion and Unemploymen e ( z) u When referring o inflaion, expeced inflaion, or unemploymen in a specific year, he equaion above needs o include ime indexes, as follows: e z u The variables, e, and u refer o inflaion, expeced inflaion and unemploymen in year. and z are assumed consan and don have ime indexes.
7 The Phillips Curve 7 of The Early Incarnaion If we se e = 0, hen: ( z) u This is he negaive relaion beween unemploymen and inflaion ha Phillips found for he Unied Kingdom, and Solow and Samuelson found for he Unied Saes (or he original Phillips curve).
8 The Phillips Curve 8 of The Early Incarnaion The wage-price spiral: Given Pe =P-1: u W P P P P 1 1 Low unemploymen leads o a higher nominal wage. In response o he higher nominal wage, firms increase heir prices and he price level increases. In response, workers ask for a higher wage. Higher nominal wage leads firms o furher increase prices. As a resul, he price level increases furher. This furher increases wages asked for by workers. And so he race beween prices and wages resuls in seady wage and price inflaion.
9 The Phillips Curve 9 of Muaions Figure 2 Inflaion versus Unemploymen in he Unied Saes, 1948 o 1969 The seady decline in he U.S. unemploymen rae hroughou he 1960s was associaed wih a seady increase in he inflaion rae.
10 The Phillips Curve 10 of Muaions Figure 3 Inflaion versus Unemploymen in he Unied Saes Since 1970 Beginning in 1970, he relaion beween he unemploymen rae and he inflaion rae disappeared in he Unied Saes.
11 The Phillips Curve 11 of Muaions The negaive relaion beween unemploymen and inflaion held hroughou he 1960s, bu i vanished afer ha, for wo reasons: An increase in he price of oil, bu more imporanly, Change in he way wage seers formed expecaions due o a change in he behavior of he rae of inflaion. The inflaion rae became consisenly posiive, and Inflaion became more persisen.
12 The Phillips Curve 12 of Muaions Figure 4 U.S. Inflaion since 1900 Since he 1960s, he U.S. inflaion rae has been consisenly posiive. Inflaion has also become more persisen: A high inflaion rae his year is more likely o be followed by a high inflaion rae nex year.
13 The Phillips Curve 13 of Muaions Suppose expecaions of inflaion are formed according o e 1 The parameer capures he effec of las year s inflaion rae, -1, on his year s expeced inflaion rae, e. The value of seadily increased in he 1970s, from zero o one.
14 The Phillips Curve 14 of Muaions We can hink of wha happened in he 1970 s as an increase in he value of over ime: As long as inflaion was low and no very persisen, i was reasonable for workers and firms o ignore pas inflaion and o assume ha he price level his year would be roughly he same as he price level las year. Bu, as inflaion became more persisen, workers and firms sared changing he ways hey formed expecaions.
15 The Phillips Curve 15 of Muaions e 1 z au When equals zero, we ge he original Phillips curve, a relaion beween he inflaion rae and he unemploymen rae: ( z) u When is posiive, he inflaion rae depends on boh he unemploymen rae and las year s inflaion rae: 1 ( z) u
16 The Phillips Curve 16 of Muaions When θ equals 1, he relaion becomes (moving las year s inflaion rae o he lef side of he equaion) 1 ( z) u When =1, he unemploymen rae affecs no he inflaion rae, bu he change in he inflaion rae. Since 1970, a clear negaive relaion emerged beween he unemploymen rae and he change in he inflaion rae.
17 The Phillips Curve 17 of Muaions Figure 5 Change in Inflaion Versus Unemploymen in he Unied Saes Since 1970 Since 1970, here has been a negaive relaion beween he unemploymen rae and he change in he inflaion rae in he Unied Saes. 4.4% u The line ha bes fis he scaer of poins for he period is:
18 The Phillips Curve 18 of Muaions The original Phillips curve is: ( z) u The modified Phillips curve, or he expecaions-augmened Phillips curve, or he acceleraionis Phillips curve, is: 1 ( z) u
19 The Phillips Curve 19 of Back o he Naural Rae of Unemploymen Friedman and Phelps quesioned he rade-off beween unemploymen and inflaion. They argued ha he unemploymen rae could no be susained below a cerain level, a level hey called he naural rae of unemploymen. The naural rae of unemploymen is he unemploymen rae such ha he acual inflaion rae is equal o he expeced inflaion rae. 0 ( z) u n u n hen, z
20 The Phillips Curve 20 of Back o he Naural Rae of Unemploymen Then, e au e z a a u u n Finally, assuming ha e is well approximaed by -1, hen: 1 ( u u ) n This is an imporan relaion because i gives anoher way of hinking abou he Phillips curve in erms of he acual and he naural unemploymen raes, and he change in he inflaion rae.
21 The Phillips Curve I also gives us anoher way of hinking abou he naural rae of unemploymen. The non-acceleraing-inflaion rae of unemploymen, (or NAIRU), is he rae of unemploymen required o keep he inflaion rae consan. 21 of Back o he Naural Rae of Unemploymen 1 ( u u ) n The equaion above is an imporan relaion for wo reasons: I gives us anoher way of hinking abou he Phillips curve: as a relaion beween he acual unemploymen rae u, he naural unemploymen rae u n, and he change in he inflaion 1 rae
22 A Summary and Many Warnings 22 of Le s summarize wha we have learned so far: The aggregae supply relaion is well capured in he Unied Saes oday by a relaion beween he change in he inflaion rae and he deviaion of he unemploymen rae from he naural rae of unemploymen. When he unemploymen rae exceeds he naural rae of unemploymen, he inflaion rae decreases. When he unemploymen rae is below he naural rae of unemploymen, he inflaion rae increases.
23 23 of Theory ahead of Facs: Milon Friedman and Edmund Phelps Economiss are usually no very good a predicing major changes before hey happen. Here is an excepion. In he lae 1960s precisely as he original Phillips curve relaion was working like a charm wo economiss, Milon Friedman and Edmund Phelps, argued ha he appearance of a rade-off beween inflaion and unemploymen was an illusion. Friedman could no have been more righ. A few years laer, he original Phillips curve sared o disappear, in exacly he way Friedman had prediced.
24 A Summary and Many Warnings 24 of Variaions in he Naural Rae Across Counries u n z The facors ha affec he naural rae of unemploymen above differ across counries. Therefore, here is no reason o expec all counries o have he same naural rae of unemploymen.
25 A Summary and Many Warnings 25 of Variaions in he Naural Rae Over Time 1 ( z) u In he equaion above, he erms and z may no be consan bu, in fac, vary over ime, leading o changes in he naural rae of unemploymen. The U.S. naural rae of unemploymen has decreased o a level beween 4% and 5% oday.
26 26 of Wha Explains European Unemploymen? Figure 1 Unemploymen Raes in 15 European Counries, 2006
27 27 of Has he U.S. Naural Rae of Unemploymen Fallen since he Early 1990s and, If So, Why? Figure 1 Change in Inflaion versus Unemploymen in he Unied Saes since 1997
28 28 of Has he U.S. Naural Rae of Unemploymen Fallen since he Early 1990s and, If So, Why? Par of he decrease, however, seems aribuable o oher facors. Among hem: The aging of he U.S. populaion. The increase in he prison populaion. The increase in he number of workers on disabiliy. The increase in emporary help employmen. The unexpecedly high rae of produciviy growh since he end of he 1990s.
29 A Summary and Many Warnings 29 of High Inflaion and he Phillips Curve Relaion The relaion beween unemploymen and inflaion is likely o change wih he level and he persisence of inflaion. When inflaion is high, i is also more variable. The form of wage agreemens also changes wih he level of inflaion. Wage indexaion, a rule ha auomaically increases wages in line wih inflaion, becomes more prevalen when inflaion is high.
30 A Summary and Many Warnings 30 of High Inflaion and he Phillips Curve Relaion Le denoe he proporion of labor conracs ha is indexed, and (1 ) he proporion ha is no indexed. Then: ( u u ) e n [ ( 1 ) ] ( u u ) e n The proporion of conracs ha is indexed responds o, while he proporion ha is no responds o e. When =0, all wages are se on he basis of expeced inflaion (equal o las year s inflaion), hen: 1 ( u un )
31 A Summary and Many Warnings 31 of High Inflaion and he Phillips Curve Relaion When is posiive, u u ( 1 ) ( ) 1 n According o his equaion, he higher he proporion of wage conracs ha is indexed he higher --he larger he effec of he unemploymen rae on he change in inflaion. When is closer o 1, small changes in unemploymen can lead o very large changes in inflaion.
32 A Summary and Many Warnings 32 of Deflaion and he Phillips Curve Relaion Given he very high rae of unemploymen during he Grea Depression, we would have expeced a large rae of deflaion, bu deflaion was limied and inflaion was acually posiive. The reason for his may be ha he Phillips curve relaion may disappear or a leas become weaker when he economy is close o zero inflaion.
33 Thank YOU for aenion End
ANSWER ALL QUESTIONS. CHAPTERS 6-9; (Blanchard)
ANSWER ALL QUESTIONS CHAPTERS 6-9; 18-20 (Blanchard) Quesion 1 Discuss in deail he following: a) The sacrifice raio b) Okun s law c) The neuraliy of money d) Bargaining power e) NAIRU f) Wage indexaion
More informationMacroeconomics II A dynamic approach to short run economic fluctuations. The DAD/DAS model.
Macroeconomics II A dynamic approach o shor run economic flucuaions. The DAD/DAS model. Par 2. The demand side of he model he dynamic aggregae demand (DAD) Inflaion and dynamics in he shor run So far,
More informationOutput: The Demand for Goods and Services
IN CHAPTER 15 how o incorporae dynamics ino he AD-AS model we previously sudied how o use he dynamic AD-AS model o illusrae long-run economic growh how o use he dynamic AD-AS model o race ou he effecs
More informationSan Francisco State University ECON 560 Summer 2018 Problem set 3 Due Monday, July 23
San Francisco Sae Universiy Michael Bar ECON 56 Summer 28 Problem se 3 Due Monday, July 23 Name Assignmen Rules. Homework assignmens mus be yped. For insrucions on how o ype equaions and mah objecs please
More informationCHAPTER CHAPTER18. Openness in Goods. and Financial Markets. Openness in Goods, and Financial Markets. Openness in Goods,
Openness in Goods and Financial Markes CHAPTER CHAPTER18 Openness in Goods, and Openness has hree disinc dimensions: 1. Openness in goods markes. Free rade resricions include ariffs and quoas. 2. Openness
More informationMacroeconomics II THE AD-AS MODEL. A Road Map
Macroeconomics II Class 4 THE AD-AS MODEL Class 8 A Road Map THE AD-AS MODEL: MICROFOUNDATIONS 1. Aggregae Supply 1.1 The Long-Run AS Curve 1.2 rice and Wage Sickiness 2.1 Aggregae Demand 2.2 Equilibrium
More informationProcess of convergence dr Joanna Wolszczak-Derlacz. Lecture 4 and 5 Solow growth model (a)
Process of convergence dr Joanna Wolszczak-Derlacz ecure 4 and 5 Solow growh model a Solow growh model Rober Solow "A Conribuion o he Theory of Economic Growh." Quarerly Journal of Economics 70 February
More informationECONOMIC GROWTH. Student Assessment. Macroeconomics II. Class 1
Suden Assessmen You will be graded on he basis of In-class aciviies (quizzes worh 30 poins) which can be replaced wih he number of marks from he regular uorial IF i is >=30 (capped a 30, i.e. marks from
More informationUCLA Department of Economics Fall PhD. Qualifying Exam in Macroeconomic Theory
UCLA Deparmen of Economics Fall 2016 PhD. Qualifying Exam in Macroeconomic Theory Insrucions: This exam consiss of hree pars, and you are o complee each par. Answer each par in a separae bluebook. All
More informationEmpirical analysis on China money multiplier
Aug. 2009, Volume 8, No.8 (Serial No.74) Chinese Business Review, ISSN 1537-1506, USA Empirical analysis on China money muliplier SHANG Hua-juan (Financial School, Shanghai Universiy of Finance and Economics,
More informationCHAPTER CHAPTER26. Fiscal Policy: A Summing Up. Prepared by: Fernando Quijano and Yvonn Quijano
Fiscal Policy: A Summing Up Prepared by: Fernando Quijano and vonn Quijano CHAPTER CHAPTER26 2006 Prenice Hall usiness Publishing Macroeconomics, 4/e Olivier lanchard Chaper 26: Fiscal Policy: A Summing
More information2. Quantity and price measures in macroeconomic statistics 2.1. Long-run deflation? As typical price indexes, Figure 2-1 depicts the GDP deflator,
1 2. Quaniy and price measures in macroeconomic saisics 2.1. Long-run deflaion? As ypical price indexes, Figure 2-1 depics he GD deflaor, he Consumer rice ndex (C), and he Corporae Goods rice ndex (CG)
More informationExam 1. Econ520. Spring 2017
Exam 1. Econ520. Spring 2017 Professor Luz Hendricks UNC Insrucions: Answer all quesions. Clearly number your answers. Wrie legibly. Do no wrie your answers on he quesion shees. Explain your answers do
More informationSpring 2011 Social Sciences 7418 University of Wisconsin-Madison
Economics 32, Sec. 1 Menzie D. Chinn Spring 211 Social Sciences 7418 Universiy of Wisconsin-Madison Noes for Econ 32-1 FALL 21 Miderm 1 Exam The Fall 21 Econ 32-1 course used Hall and Papell, Macroeconomics
More informationStylized fact: high cyclical correlation of monetary aggregates and output
SIMPLE DSGE MODELS OF MONEY PART II SEPTEMBER 27, 2011 Inroducion BUSINESS CYCLE IMPLICATIONS OF MONEY Sylized fac: high cyclical correlaion of moneary aggregaes and oupu Convenional Keynesian view: nominal
More informationMA Advanced Macro, 2016 (Karl Whelan) 1
MA Advanced Macro, 2016 (Karl Whelan) 1 The Calvo Model of Price Rigidiy The form of price rigidiy faced by he Calvo firm is as follows. Each period, only a random fracion (1 ) of firms are able o rese
More informationCENTRO DE ESTUDIOS MONETARIOS Y FINANCIEROS T. J. KEHOE MACROECONOMICS I WINTER 2011 PROBLEM SET #6
CENTRO DE ESTUDIOS MONETARIOS Y FINANCIEROS T J KEHOE MACROECONOMICS I WINTER PROBLEM SET #6 This quesion requires you o apply he Hodrick-Presco filer o he ime series for macroeconomic variables for he
More informationTechnological progress breakthrough inventions. Dr hab. Joanna Siwińska-Gorzelak
Technological progress breakhrough invenions Dr hab. Joanna Siwińska-Gorzelak Inroducion Afer The Economis : Solow has shown, ha accumulaion of capial alone canno yield lasing progress. Wha can? Anyhing
More informationThe Death of the Phillips Curve?
The Deah of he Phillips Curve? Anhony Murphy Federal Reserve Bank of Dallas Research Deparmen Working Paper 1801 hps://doi.org/10.19/wp1801 The Deah of he Phillips Curve? 1 Anhony Murphy, Federal Reserve
More informationOPTIMUM FISCAL AND MONETARY POLICY USING THE MONETARY OVERLAPPING GENERATION MODELS
Kuwai Chaper of Arabian Journal of Business and Managemen Review Vol. 3, No.6; Feb. 2014 OPTIMUM FISCAL AND MONETARY POLICY USING THE MONETARY OVERLAPPING GENERATION MODELS Ayoub Faramarzi 1, Dr.Rahim
More informationInventory Investment. Investment Decision and Expected Profit. Lecture 5
Invenory Invesmen. Invesmen Decision and Expeced Profi Lecure 5 Invenory Accumulaion 1. Invenory socks 1) Changes in invenory holdings represen an imporan and highly volaile ype of invesmen spending. 2)
More information(1 + Nominal Yield) = (1 + Real Yield) (1 + Expected Inflation Rate) (1 + Inflation Risk Premium)
5. Inflaion-linked bonds Inflaion is an economic erm ha describes he general rise in prices of goods and services. As prices rise, a uni of money can buy less goods and services. Hence, inflaion is an
More informationa. If Y is 1,000, M is 100, and the growth rate of nominal money is 1 percent, what must i and P be?
Problem Se 4 ECN 101 Inermediae Macroeconomics SOLUTIONS Numerical Quesions 1. Assume ha he demand for real money balance (M/P) is M/P = 0.6-100i, where is naional income and i is he nominal ineres rae.
More informationThe Labour Market in Macroeconomic Models of the Australian Economy *
The Labour Marke in Macroeconomic Models of he Ausralian Economy * Jim Thomson Melbourne Insiue of Applied Economic and Social Research The Universiy of Melbourne Melbourne Insiue Working Paper No. 8/00
More informationEconomics 301 Fall Name. Answer all questions. Each sub-question is worth 7 points (except 4d).
Name Answer all quesions. Each sub-quesion is worh 7 poins (excep 4d). 1. (42 ps) The informaion below describes he curren sae of a growing closed economy. Producion funcion: α 1 Y = K ( Q N ) α Producion
More informationAn enduring question in macroeconomics: does monetary policy have any important effects on the real (i.e, real GDP, consumption, etc) economy?
ONETARY OLICY IN THE INFINITE-ERIOD ECONOY: SHORT-RUN EFFECTS NOVEBER 6, 20 oneary olicy Analysis: Shor-Run Effecs IS ONETARY OLICY NEUTRAL? An enduring quesion in macroeconomics: does moneary policy have
More informationR e. Y R, X R, u e, and. Use the attached excel spreadsheets to
HW # Saisical Financial Modeling ( P Theodossiou) 1 The following are annual reurns for US finance socks (F) and he S&P500 socks index (M) Year Reurn Finance Socks Reurn S&P500 Year Reurn Finance Socks
More informationProblem Set 1 Answers. a. The computer is a final good produced and sold in Hence, 2006 GDP increases by $2,000.
Social Analysis 10 Spring 2006 Problem Se 1 Answers Quesion 1 a. The compuer is a final good produced and sold in 2006. Hence, 2006 GDP increases by $2,000. b. The bread is a final good sold in 2006. 2006
More informationGDP: Production and Income Data published since 1947
GDP: Producion and Income Daa published since 1947 GDP is he marke value of all final goods and services produced wihin a counry in a given period of ime. GDP is he sum of value added in he economy during
More informationAppendix B: DETAILS ABOUT THE SIMULATION MODEL. contained in lookup tables that are all calculated on an auxiliary spreadsheet.
Appendix B: DETAILS ABOUT THE SIMULATION MODEL The simulaion model is carried ou on one spreadshee and has five modules, four of which are conained in lookup ables ha are all calculaed on an auxiliary
More informationLIDSTONE IN THE CONTINUOUS CASE by. Ragnar Norberg
LIDSTONE IN THE CONTINUOUS CASE by Ragnar Norberg Absrac A generalized version of he classical Lidsone heorem, which deals wih he dependency of reserves on echnical basis and conrac erms, is proved in
More information12. Exponential growth simulation.
1. Exponenial growh simulaion. Mos people hink of exponenial growh as being growh ha is very fas. However, exponenial growh has a precise meaning a populaion grows exponenially when is growh rae is proporional
More informationECO 301 MACROECONOMIC THEORY UNIVERSITY OF MIAMI DEPARTMENT OF ECONOMICS PRACTICE FINAL EXAM Instructor: Dr. S. Nuray Akin
ECO 301 MACROECONOMIC THEORY UNIVERSITY OF MIAMI DEPARTMENT OF ECONOMICS PRACTICE FINAL EXAM Insrucor: Dr. S. Nuray Akin Name: ID: Insrucions: This exam consiss of 12 pages; please check your examinaion
More information4452 Mathematical Modeling Lecture 17: Modeling of Data: Linear Regression
Mah Modeling Lecure 17: Modeling of Daa: Linear Regression Page 1 5 Mahemaical Modeling Lecure 17: Modeling of Daa: Linear Regression Inroducion In modeling of daa, we are given a se of daa poins, and
More informationMacroeconomics. Typical macro questions (I) Typical macro questions (II) Methodology of macroeconomics. Tasks carried out by macroeconomists
Macroeconomics Macroeconomics is he area of economics ha sudies he overall economic aciviy in a counry or region by means of indicaors of ha aciviy. There is no essenial divide beween micro and macroeconomics,
More informationFundamental Basic. Fundamentals. Fundamental PV Principle. Time Value of Money. Fundamental. Chapter 2. How to Calculate Present Values
McGraw-Hill/Irwin Chaper 2 How o Calculae Presen Values Principles of Corporae Finance Tenh Ediion Slides by Mahew Will And Bo Sjö 22 Copyrigh 2 by he McGraw-Hill Companies, Inc. All righs reserved. Fundamenal
More informationEconomic Growth Continued: From Solow to Ramsey
Economic Growh Coninued: From Solow o Ramsey J. Bradford DeLong May 2008 Choosing a Naional Savings Rae Wha can we say abou economic policy and long-run growh? To keep maers simple, le us assume ha he
More informationSupplement to Chapter 3
Supplemen o Chaper 3 I. Measuring Real GD and Inflaion If here were only one good in he world, anchovies, hen daa and prices would deermine real oupu and inflaion perfecly: GD Q ; GD Q. + + + Then, he
More informationObjectives for Exponential Functions Activity
Objecives for Recognize siuaions having a consan percen change as exponenial Creae an exponenial model given wo poins Creae and inerpre an exponenial model in a conex Compound ineres problems Perform exponenial
More information1. To express the production function in terms of output per worker and capital per worker, divide by N: K f N
THE LOG RU Exercise 8 The Solow Model Suppose an economy is characerized by he aggregae producion funcion / /, where is aggregae oupu, is capial and is employmen. Suppose furher ha aggregae saving is proporional
More informationPopulation growth and intra-specific competition in duckweed
Populaion growh and inra-specific compeiion in duckweed We will use a species of floaing aquaic plan o invesigae principles of populaion growh and inra-specific compeiion, in oher words densiy-dependence.
More informationFINAL EXAM EC26102: MONEY, BANKING AND FINANCIAL MARKETS MAY 11, 2004
FINAL EXAM EC26102: MONEY, BANKING AND FINANCIAL MARKETS MAY 11, 2004 This exam has 50 quesions on 14 pages. Before you begin, please check o make sure ha your copy has all 50 quesions and all 14 pages.
More informationChapter 7 Monetary and Exchange Rate Policy in a Small Open Economy
George Alogoskoufis, Inernaional Macroeconomics, 2016 Chaper 7 Moneary and Exchange Rae Policy in a Small Open Economy In his chaper we analyze he effecs of moneary and exchange rae policy in a shor run
More informationEvaluating Projects under Uncertainty
Evaluaing Projecs under Uncerainy March 17, 4 1 Projec risk = possible variaion in cash flows 2 1 Commonly used measure of projec risk is he variabiliy of he reurn 3 Mehods of dealing wih uncerainy in
More informationCURRENCY CHOICES IN VALUATION AND THE INTEREST PARITY AND PURCHASING POWER PARITY THEORIES DR. GUILLERMO L. DUMRAUF
CURRENCY CHOICES IN VALUATION AN THE INTEREST PARITY AN PURCHASING POWER PARITY THEORIES R. GUILLERMO L. UMRAUF TO VALUE THE INVESTMENT IN THE OMESTIC OR FOREIGN CURRENCY? Valuing an invesmen or an acquisiion
More informationFinal Exam Answers Exchange Rate Economics
Kiel Insiu für Welwirhschaf Advanced Sudies in Inernaional Economic Policy Research Spring 2005 Menzie D. Chinn Final Exam Answers Exchange Rae Economics This exam is 1 ½ hours long. Answer all quesions.
More informationThe relation between U.S. money growth and inflation: evidence from a band pass filter. Abstract
The relaion beween U.S. money growh and inflaion: evidence from a band pass filer Gary Shelley Dep. of Economics Finance; Eas Tennessee Sae Universiy Frederick Wallace Dep. of Managemen Markeing; Prairie
More informationINSTITUTE OF ACTUARIES OF INDIA
INSIUE OF ACUARIES OF INDIA EAMINAIONS 23 rd May 2011 Subjec S6 Finance and Invesmen B ime allowed: hree hours (9.45* 13.00 Hrs) oal Marks: 100 INSRUCIONS O HE CANDIDAES 1. Please read he insrucions on
More informationAggregate Demand Aggregate Supply 1 Y. f P
ublic Aairs 974 Menzie D. Chinn Fall 202 Social Sciences 748 Universiy o Wisconsin-Madison Aggregae Demand Aggregae Supply. The Basic Model wih Expeced Inlaion Se o Zero Consider he hillips curve relaionship:
More informationDiscussion of Cook and Devereux: Sharing the Burden: International Policy Cooperation. Gernot Müller
Discussion of Cook and Devereux: Sharing he Burden: Inernaional Policy Cooperaion in a Liquidiy Trap Gerno Müller Universiy of Bonn The paper Quesion: Opimal global policy response o counry specific shock
More informationMacroeconomics. Part 3 Macroeconomics of Financial Markets. Lecture 8 Investment: basic concepts
Macroeconomics Par 3 Macroeconomics of Financial Markes Lecure 8 Invesmen: basic conceps Moivaion General equilibrium Ramsey and OLG models have very simple assumpions ha invesmen ino producion capial
More information1.2 A CATALOG OF ESSENTIAL FUNCTIONS
SETION. A ATALOG OF ESSENTIAL FUNTIONS. A ATALOG OF ESSENTIAL FUNTIONS V Pla he Video V EXAMPLE A Table liss he average carbon dioide level in he amosphere, measured in pars per million a Mauna Loa Observaor
More informationFinancial Econometrics (FinMetrics02) Returns, Yields, Compounding, and Horizon
Financial Economerics FinMerics02) Reurns, Yields, Compounding, and Horizon Nelson Mark Universiy of Nore Dame Fall 2017 Augus 30, 2017 1 Conceps o cover Yields o mauriy) Holding period) reurns Compounding
More informationReal Business Cycles. Chapter III. 1 What is the Business Cycle? Professor Thomas Chaney
Chaper III Real Business Cycles Professor Thomas Chaney Wha is he Business Cycle? While I will no give you a formal definiion of he business cycle (here is acually no such very formal definiion), looking
More informationChapter Outline CHAPTER
8-0 8-1 Chaper Ouline CHAPTER 8 Sraegy and Analysis in Using Ne Presen Value 8.1 Decision Trees 8.2 Sensiiviy Analysis, Scenario Analysis, and Break-Even Analysis 8.3 Mone Carlo Simulaion 8. Opions 8.5
More informationProblem 1 / 25 Problem 2 / 25 Problem 3 / 11 Problem 4 / 15 Problem 5 / 24 TOTAL / 100
Deparmen of Economics Universiy of Maryland Economics 35 Inermediae Macroeconomic Analysis Miderm Exam Suggesed Soluions Professor Sanjay Chugh Fall 008 NAME: The Exam has a oal of five (5) problems and
More informationChapter 13 A Perfectly Competitive New Classical Model
George Alogoskoufis, Dynamic Macroeconomics, 2016 Chaper 13 A Perfecly Compeiive New Classical Model In his chaper we inroduce a perfecly compeiive new classical model of aggregae flucuaions in which here
More informationIJRSS Volume 2, Issue 2 ISSN:
A LOGITIC BROWNIAN MOTION WITH A PRICE OF DIVIDEND YIELDING AET D. B. ODUOR ilas N. Onyango _ Absrac: In his paper, we have used he idea of Onyango (2003) he used o develop a logisic equaion used in naural
More informationProblem 1 / 25 Problem 2 / 25 Problem 3 / 30 Problem 4 / 20 TOTAL / 100
Deparmen of Economics Universiy of Maryland Economics 325 Inermediae Macroeconomic Analysis Final Exam Professor Sanjay Chugh Spring 2009 May 16, 2009 NAME: TA S NAME: The Exam has a oal of four (4) problems
More informationErratic Price, Smooth Dividend. Variance Bounds. Present Value. Ex Post Rational Price. Standard and Poor s Composite Stock-Price Index
Erraic Price, Smooh Dividend Shiller [1] argues ha he sock marke is inefficien: sock prices flucuae oo much. According o economic heory, he sock price should equal he presen value of expeced dividends.
More informationThis specification describes the models that are used to forecast
PCE and CPI Inflaion Differenials: Convering Inflaion Forecass Model Specificaion By Craig S. Hakkio This specificaion describes he models ha are used o forecas he inflaion differenial. The 14 forecass
More informationMicroeconomic Sources of Real Exchange Rate Variability
Microeconomic Sources of Real Exchange Rae Variabiliy By Mario J. Crucini and Chris Telmer Discussed by Moren O. Ravn THE PAPER Crucini and Telmer find ha (a) The cross-secional variance of LOP level violaions
More informationASSIGNMENT BOOKLET. M.Sc. (Mathematics with Applications in Computer Science) Mathematical Modelling (January 2014 November 2014)
ASSIGNMENT BOOKLET MMT-009 M.Sc. (Mahemaics wih Applicaions in Compuer Science) Mahemaical Modelling (January 014 November 014) School of Sciences Indira Gandhi Naional Open Universiy Maidan Garhi New
More informationIntroduction. Enterprises and background. chapter
NACE: High-Growh Inroducion Enerprises and background 18 chaper High-Growh Enerprises 8 8.1 Definiion A variey of approaches can be considered as providing he basis for defining high-growh enerprises.
More informationOn the Impact of Inflation and Exchange Rate on Conditional Stock Market Volatility: A Re-Assessment
MPRA Munich Personal RePEc Archive On he Impac of Inflaion and Exchange Rae on Condiional Sock Marke Volailiy: A Re-Assessmen OlaOluwa S Yaya and Olanrewaju I Shiu Deparmen of Saisics, Universiy of Ibadan,
More informationForecasting and Monetary Policy Analysis in Emerging Economies: The case of India (preliminary)
Forecasing and Moneary Policy Analysis in Emerging Economies: The case of India (preliminary) Rudrani Bhaacharya, Pranav Gupa, Ila Panaik, Rafael Porillo New Delhi 19 h November This presenaion should
More informationBond Prices and Interest Rates
Winer erm 1999 Bond rice Handou age 1 of 4 Bond rices and Ineres Raes A bond is an IOU. ha is, a bond is a promise o pay, in he fuure, fixed amouns ha are saed on he bond. he ineres rae ha a bond acually
More informationDoes the Central Bank Set the Natural Rate of Unemployment?
Does he Cenral Bank Se he Naural Rae of Unemploymen? Theoreical Consideraions on Wage Policies for he Transmission Mechanism of Moneary Policy by Sefan Collignon Inroducion Will he firs acion of he European
More informationCore issue: there are limits or restrictions that each policy-setting authority places on the actions of the other
FISCAL AND MONETARY INTERACTIONS: PRESENT-VALUE ANALYSIS NOVEMBER 20, 2014 Inroducion CONSOLIDATED GOVERNMENT BUDGET Core issue: here are limis or resricions ha each policy-seing auhoriy places on he acions
More informationNOMINAL RIGIDITIES IN A DSGE MODEL: THE PERSISTENCE PUZZLE OCTOBER 14, 2010 EMPIRICAL EFFECTS OF MONETARY SHOCKS. Empirical Motivation
NOMINAL RIGIDITIES IN A DSGE MODEL: THE PERSISTENCE PUZZLE OCTOBER 4, 200 Empirical Moivaion EMPIRICAL EFFECTS OF MONETARY SHOCKS Hump-shaped responses o moneary shocks (Chrisiano, Eichenbaum, and Evans
More informationReal Exchange Rate Adjustment In and Out of the Eurozone. Martin Berka Michael B. Devereux Charles Engel
Real Exchange Rae Adjusmen In and Ou of he Eurozone Marin Berka Michael B. Devereux Charles Engel 5 h Bi-Annual Bank of Canada/European Cenral Bank conference on Exchange Raes: A Global Perspecive, ECB,
More information7 pages 1. Hull and White Generalized model. Ismail Laachir. March 1, Model Presentation 1
7 pages 1 Hull and Whie Generalized model Ismail Laachir March 1, 212 Conens 1 Model Presenaion 1 2 Calibraion of he model 3 2.1 Fiing he iniial yield curve................... 3 2.2 Fiing he caple implied
More informationFinancial Econometrics Jeffrey R. Russell Midterm Winter 2011
Name Financial Economerics Jeffrey R. Russell Miderm Winer 2011 You have 2 hours o complee he exam. Use can use a calculaor. Try o fi all your work in he space provided. If you find you need more space
More informationMultiple Choice Questions Solutions are provided directly when you do the online tests.
SOLUTIONS Muliple Choice Quesions Soluions are provided direcly when you do he online ess. Numerical Quesions 1. Nominal and Real GDP Suppose han an economy consiss of only 2 ypes of producs: compuers
More informationEcon 546 Lecture 4. The Basic New Keynesian Model Michael Devereux January 2011
Econ 546 Lecure 4 The Basic New Keynesian Model Michael Devereux January 20 Road map for his lecure We are evenually going o ge 3 equaions, fully describing he NK model The firs wo are jus he same as before:
More informationReconciling Gross Output TFP Growth with Value Added TFP Growth
Reconciling Gross Oupu TP Growh wih Value Added TP Growh Erwin Diewer Universiy of Briish Columbia and Universiy of New Souh Wales ABSTRACT This aricle obains relaively simple exac expressions ha relae
More informationEstimating Earnings Trend Using Unobserved Components Framework
Esimaing Earnings Trend Using Unobserved Componens Framework Arabinda Basisha and Alexander Kurov College of Business and Economics, Wes Virginia Universiy December 008 Absrac Regressions using valuaion
More informationVolume 31, Issue 1. Pitfall of simple permanent income hypothesis model
Volume 31, Issue 1 ifall of simple permanen income hypohesis model Kazuo Masuda Bank of Japan Absrac ermanen Income Hypohesis (hereafer, IH) is one of he cenral conceps in macroeconomics. Single equaion
More informationYou should turn in (at least) FOUR bluebooks, one (or more, if needed) bluebook(s) for each question.
UCLA Deparmen of Economics Spring 05 PhD. Qualifying Exam in Macroeconomic Theory Insrucions: This exam consiss of hree pars, and each par is worh 0 poins. Pars and have one quesion each, and Par 3 has
More informationKey Formulas. From Larson/Farber Elementary Statistics: Picturing the World, Fifth Edition 2012 Prentice Hall. Standard Score: CHAPTER 3.
Key Formulas From Larson/Farber Elemenary Saisics: Picuring he World, Fifh Ediion 01 Prenice Hall CHAPTER Class Widh = Range of daa Number of classes 1round up o nex convenien number 1Lower class limi
More informationVolatility and Hedging Errors
Volailiy and Hedging Errors Jim Gaheral Sepember, 5 1999 Background Derivaive porfolio bookrunners ofen complain ha hedging a marke-implied volailiies is sub-opimal relaive o hedging a heir bes guess of
More information12 Dynamic Models with Sticky Prices
Economics 314 Coursebook, 2014 Jeffrey Parker 12 Dynamic Models wih Sicky Prices Chaper 12 Conens A. Topics and Tools... 1 B. Undersanding Romer's Chaper 7... 2 Romer s building blocks... 3 Macroeconomic
More information9 NEW KEYNESIAN MODELS OF AGGREGATE DEMAND
Economics 314 Coursebook, 2019 Jeffrey Parker 9 NEW KEYNESIAN MODELS OF AGGREGATE DEMAND Chaper 9 Conens A. Topics and Tools... 2 B. Romer s New Keynesian IS/LM and IS/MP... 3 Uiliy maximizaion... 3 Consumpion
More informationOptimal Tax-Timing and Asset Allocation when Tax Rebates on Capital Losses are Limited
Opimal Tax-Timing and Asse Allocaion when Tax Rebaes on Capial Losses are Limied Marcel Marekwica This version: January 15, 2007 Absrac Since Consaninides (1983) i is well known ha in a marke where capial
More information(a) Assume that the entrepreneur is willing to undertake the project, and analyze the problem from the point of view of the outside investor.
Problem Se # Soluions Course 4.454 Macro IV TA: Todd Gormley, gormley@mi.edu Disribued: November 9, 004 Due: Tuesday, November 3, 004 [in class]. Financial Consrains (via Cosly Sae Verificaion) Consider
More informationSection 4 The Exchange Rate in the Long Run
Secion 4 he Exchange Rae in he Long Run 1 Conen Objecives Purchasing Power Pariy A Long-Run PPP Model he Real Exchange Rae Summary 2 Objecives o undersand he law of one price and purchasing power pariy
More informationGrowth, Welfare, and Public Infrastructure: A General Equilibrium Analysis of Latin American Economies
Volume 26, Number 2, December 2001 Growh, Welfare, and Public Infrasrucure: A General Equilibrium Analysis of Lain American Economies Felix K. Rioja Empirical sudies have found infrasrucure invesmen imporan
More informationUzawa(1961) s Steady-State Theorem in Malthusian Model
MPRA Munich Personal RePEc Archive Uzawa(1961) s Seady-Sae Theorem in Malhusian Model Defu Li and Jiuli Huang April 214 Online a hp://mpra.ub.uni-muenchen.de/55329/ MPRA Paper No. 55329, posed 16. April
More informationCHAPTER 3 How to Calculate Present Values. Answers to Practice Questions
CHAPTER 3 How o Calculae Presen Values Answers o Pracice Quesions. a. PV $00/.0 0 $90.53 b. PV $00/.3 0 $9.46 c. PV $00/.5 5 $ 3.5 d. PV $00/. + $00/. + $00/. 3 $40.8. a. DF + r 0.905 r 0.050 0.50% b.
More informationHedging Performance of Indonesia Exchange Rate
Hedging Performance of Indonesia Exchange Rae By: Eneng Nur Hasanah Fakulas Ekonomi dan Bisnis-Manajemen, Universias Islam Bandung (Unisba) E-mail: enengnurhasanah@gmail.com ABSTRACT The flucuaion of exchange
More informationASYMMETRY AND INFLATION DYNAMICS IN DIFFERENT SPECIFICATIONS OF THE PHILLIPS CURVE FOR THE EURO AREA
ASYMMETRY AND INFLATION DYNAMICS IN DIFFERENT SPECIFICATIONS OF THE PHILLIPS CURVE FOR THE EURO AREA Maria Paloviia and David Mayes Bank of Finland Absrac This paper sudies he differences in inflaion dynamics
More informationSMALL MENU COSTS AND LARGE BUSINESS CYCLES: AN EXTENSION OF THE MANKIW MODEL
SMALL MENU COSTS AND LARGE BUSINESS CYCLES: AN EXTENSION OF THE MANKIW MODEL 2 Hiranya K. Nah, Sam Houson Sae Universiy Rober Srecher, Sam Houson Sae Universiy ABSTRACT Using a muli-period general equilibrium
More informationSTATIONERY REQUIREMENTS SPECIAL REQUIREMENTS 20 Page booklet List of statistical formulae New Cambridge Elementary Statistical Tables
ECONOMICS RIPOS Par I Friday 7 June 005 9 Paper Quaniaive Mehods in Economics his exam comprises four secions. Secions A and B are on Mahemaics; Secions C and D are on Saisics. You should do he appropriae
More informationThe Relationship between Money Demand and Interest Rates: An Empirical Investigation in Sri Lanka
The Relaionship beween Money Demand and Ineres Raes: An Empirical Invesigaion in Sri Lanka R. C. P. Padmasiri 1 and O. G. Dayarana Banda 2 1 Economic Research Uni, Deparmen of Expor Agriculure 2 Deparmen
More informationDoes Inflation Targeting Anchor Long-Run Inflation Expectations?
Does Inflaion Targeing Anchor Long-Run Inflaion Expecaions? Evidence from Long-Term Bond Yields in he Unied Saes, Unied Kingdom, and Sweden Refe S. Gürkaynak, Andrew T. Levin, and Eric T. Swanson Bilken
More informationEndogenous Growth: An Alternative Measuring Device? I. Introduction
Endogenous Growh: An Alernaive Measuring Device? I. Inroducion Facs are essenial in economics as hey allow us o es heory. However, hey are also useful in he calibraion procedure for he purpose of choosing
More information1 Purpose of the paper
Moneary Economics 2 F.C. Bagliano - Sepember 2017 Noes on: F.X. Diebold and C. Li, Forecasing he erm srucure of governmen bond yields, Journal of Economerics, 2006 1 Purpose of he paper The paper presens
More informationWage, Productivity and Unemployment Microeconomics Theory and Macroeconomic Data
MPA Munich Personal epec Archive Wage, Produciviy and Unemploymen Microeconomics Theory and Macroeconomic Daa Weshah azzak 1 November 2014 Online a hps://mpra.ub.uni-muenchen.de/61105/ MPA Paper No. 61105,
More informationAn Incentive-Based, Multi-Period Decision Model for Hierarchical Systems
Wernz C. and Deshmukh A. An Incenive-Based Muli-Period Decision Model for Hierarchical Sysems Proceedings of he 3 rd Inernaional Conference on Global Inerdependence and Decision Sciences (ICGIDS) pp. 84-88
More informationOnline Appendix. Using the reduced-form model notation proposed by Doshi, el al. (2013), 1. and Et
Online Appendix Appendix A: The concep in a muliperiod framework Using he reduced-form model noaion proposed by Doshi, el al. (2013), 1 he yearly CDS spread S c,h for a h-year sovereign c CDS conrac can
More information