宏观经济学（第十三版）课件：Aggregate Supply and the Phillips Curve

AggregateSupplyandthePhillipsCurve

.IntroductionFurtherdeveloptheASsideoftheeconomy;examinethedynamicadjustmentprocessfromtheshortruntothelongrunTheprice-outputrelationshipisbaseduponlinksbetweenwages,prices,employment,andoutput

linkbetweenunemploymentandinflation=PhillipsCurveTranslatebetweenunemploymentandoutput,inflationandpricechangesIntroduceroleofpriceandinflationexpectations,andthe“rationalexpectationsrevolution”NOTE:theoryofASistheleastsettledareainmacroDon’tfullyunderstandwhyWandPareslowtoadjust,butofferseveraltheoriesAllmodernmodelsdifferinstartingpoint,butreachthesameconclusion:SRASisflat,LRASisvertical6-2InflationandUnemploymentFigure6.1showsU.S.unemploymentoverseveraldecadesSeveralperiodsofhighunemployment:early1960s,mid1970’s,early-mid1980’s,early1990s,andthecurrentperiodSeveralperiodsoflowunemployment:late1960’s,early2000,and20076-3InflationandUnemploymentPhillipscurve(PC)showstherelationshipbetweenunemploymentandinflationAlthoughGDPislinkedtounemployment,itiseasiertoworkwiththePCthantheASwhendiscussingunemployment6-4ThePhillipsCurve

6-5In1958A.W.PhillipspublishedastudyofwagebehaviorintheU.K.between1861and1957ThemainfindingsaresummarizedinFigure6.2ThereisaninverserelationshipbetweentherateofunemploymentandtherateofincreaseinmoneywagesFromapolicymaker’sperspective,thereisatradeoffbetweenwageinflationandunemploymentThePhillipsCurveThePCshowstherateofgrowthofwageinflationdecreaseswithincreasesinunemploymentIfWt=wagethisperiodWt+1=wagenextperiodgw=rateofwageinflation,then(1)If

*representsthenaturalrateofunemployment,thesimplePCisdefinedas:(2)wheremeasurestheresponsivenessofwagestounemploymentWagesarefallingwhen>*andrisingwhen<*

(-*)iscalledtheunemploymentgap6-6ThePhillipsCurve

Toseewhythisisso,rewriteequation(1)intermsofcurrentandpastwagelevels:

(2a)

Forwagestoriseabovepreviouslevels,umustfallbelowthenaturalrate6-7SupposetheeconomyisinequilibriumwithpricesstableandunemploymentatthenaturalrateIfmoneysupplyincreasesby10%,wagesandpricesbothmustincreaseby10%fortheeconomytoreturntoequilibriumPCshows:Ifwagesincreaseby10%,unemploymentwillhavetofallIfwagesincrease,pricewillincreaseandtheeconomywillreturntothefullemploymentlevelofoutputandunemploymentThePolicyTradeoff

6-8PCquicklybecameacornerstoneofmacroeconomicpolicyanalysissinceitsuggeststhatpolicymakerscouldchoosedifferentcombinationsofuandratesCanchooselowuifwillingtoaccepthigh(late1960’s)Canmaintainlowbyhavinghighu(early1960’s)InrealitythetradeoffbetweenuandisashortrunphenomenonTradeoffdisappearsasASbecomesverticalTheInflationExpectations-AugmentedPhillipsCurve

6-9Figure6-4showsthebehaviorofanduintheUSsince1960doesnotfitthesimplePCstoryIndividualsareconcernedwithstandardofliving,andcomparewagegrowthtoinflationIfwagesdonot“keepup”withinflation,standardoflivingfallsIndividualsformexpectationsastowhatwillbeoveraparticularperiodoftime,anduseinwagenegotiations(e)Rewrite(2)toreflectthisas:(3)TheInflationExpectations-AugmentedPhillipsCurveIfmaintainingtheassumptionofaconstantrealwage,W/P,actualwillequalwageinflationTheequationforthemodernversionofthePC,theexpectationsaugmentedPC,is:

(4)NOTE:

eispassedoneforoneintoactualu=u*whene=6-10TheInflationExpectations-AugmentedPhillipsCurve

6-11ThemodernPCintersectsthenaturalrateofuatthelevelofexpectedinflationFigure6-5illustratestheinflationexpectations-augmentedPhillipscurveforthe1980sandearly2000TheheightoftheSRPCdependsupon

e

TheInflationExpectations-AugmentedPhillipsCurve

6-12ChangesinexpectationsshiftsthecurveupanddownTheroleofeaddsanotherautomaticadjustmentmechanismtotheASsideoftheeconomyWhenhighADmovestheeconomyupandtotheleftalongtheSRPC,resultsifpersists,peopleadjusttheirexpectationsupwards,andmovetohigherSRPCTheInflationExpectations-AugmentedPhillipsCurve

6-13After1960,theoriginalPCrelationshipbrokedownHowdoestheaugmentedPCholdup?TotesttheaugmentedPC,needameasureof

ebestestimateislastperiod’sinflation,e=t-1Figure6-6illustratestheaugmentedPCusingtheequation:

AppearstoworkwellinmostperiodsRationalExpectationsTheaugmentedPCpredictsthatactualwillriseaboveewhenu<u*Sowhydon’tindividualsquicklyadjusttheirexpectationstomatchthemodel’sprediction?ThePCrelationshipreliesonpeoplebeingWRONG

aboutinaverypredictablewayIfpeoplelearntouse(4)topredict,eshouldalwaysequal,andthusu=u*RobertLucasmodifiedthemodeltoallowformistakesHearguedthatagoodeconomicsmodelshouldnotrelyonthepublicmakingeasilyavoidablemistakesSolongaswearemakingpredictionsbasedoninformationavailabletothepublic,thenthevaluesweuseforeshouldbethesameasthevaluesthemodelpredictsforSurpriseshiftsinADwillchangeu,butpredictableshiftswillnot6-14RationalExpectationsTheargumentoverrationalexpectationsisasfollows:TheusualmacroeconomicmodeltakestheheightofthePCasbeingpeggedintheSRby

e,whereeissetbyhistoricalexperienceTherationalexpectationsmodelhastheSRPCfloatingupanddowninresponsetoavailableinformationaboutthenearfutureIndividualsusenewinformationtoupdatetheirexpectationsBothmodelsagreethatifmoneygrowthwerepermanentlyincreased,thePCwouldshiftupintheLR,andwouldincreasewithnoLRchangeinuTheREmodelstatesthatthischangeisinstantaneous,whilethetraditionalmodelarguesthattheshiftisgradual6-15TheWage-UnemploymentRelationshipandStickyWagesInneoclassicaltheoryofsupply,wagesadjustinstantlytoensurethatoutputalwaysatthefullemploymentlevel,BUToutputisnotalwaysatthefullemploymentlevel,andthePCsuggeststhatwagesadjustslowlyinresponsetochangesinuThekeyquestioninthetheoryofASis“Whydoesthenominalwageadjustslowlytoshiftsindemand?”OR“Whyarewagessticky?”Wagesarestickywhenwagesmoveslowlyovertime,ratherthanbeingflexible,allowingforeconomytodeviatefromthefullemploymentlevel6-16TheWage-UnemploymentRelationshipandStickyWagesToclarifytheassumptionsaboutwagestickiness,translate(3)intoarelationshipbetweengwandthelevelofemployment:

IfN*=fullemploymentlevelofemployment N=actuallevelofemployment u=shareofN*thatisnotemployed,then

(5)Substitute(5)into(3)wehavethePCrelationshipbetweenE,

e,andgw:(2b)

6-17TheWage-UnemploymentRelationshipandStickyWages

(2b)Thewagenextperiodisequaltothewagethatprevailedthisperiod,butwithanadjustmentforthelevelofemploymentand

eAtfullemployment,N*=N,thisperiod’swageequalslastperiod’s,plusanadjustmentfor

eIfN>N*,thewagenextperiodincreasesabovethisperiod’sbymorethanesincegw-e>06-18TheWage-UnemploymentRelationshipandStickyWagesFigure6-7illustratesthewage-employmentrelationship,WNTheextenttowhichthewagerespondstoEdependsontheparameter

Ifislarge,uhaslargeeffectsonwagesandtheWNlineissteep6-19TheWage-UnemploymentRelationshipandStickyWagesThePCrelationshipalsoimpliesWNrelationshipshiftsovertimeIfthereisover-employmentthisperiod,WNshiftsuptoWN’Ifthereislessthanfullemploymentthisperiod,WNcurveshiftsdowntoWN’’

Result:ChangesinADthataltertheuthisperiodwillhaveeffectsonwagesinsubsequentperiods6-20TheWage-UnemploymentRelationshipandStickyWagesEachschoolofthoughthastoexplainwhythereisaPC,orthereasonsforwageandpricestickinessExamplesofsuchexplanationsforwageandpricestickinessinclude:ImperfectinformationFriedmanandPhelpsInthecontextofclearingmarketsCoordinationproblemsFocusontheprocessbywhichfirmsadjusttheirpriceswhendemandchangesEfficiencywagesandcostsofpricechangesFocusonwageasameansofmotivatinglabor6-21TheWage-UnemploymentRelationshipandStickyWagesExplanationofwagestickinessbuildsuponmentionedtheoriesandonecentralelementthelabormarketinvolveslong-termrelationshipsbetweenfirmsandworkersWorkingconditions,includingthewage,arerenegotiatedperiodically,butnotfrequently,duetothecostsofdoingsoAtanytime,firmsandworkersagreeonawagescheduletobepaidtocurrentlyemployedworkersIfdemandforlaborincreasesandfirmsincreasehoursofwork,intheSRwagesrisealongtheWNcurveWithdemandup,workerspressforincreasedwages,buttakestimetorenegotiateallwages(staggeredwage-settingdates)Duringtheadjustmentprocess,firmsalsoresettingPtocoverincreasedcostofproductionProcessofWandPadjustmentcontinuesuntileconomybackatfullemploymentlevelofoutput6-22FromthePhillipsCurvetotheASCurve

TranslateoutputtoemploymentCloserelationshipbetweenunemployment/employmentandoutputinSROkun’sLawdefinesthisrelationship:

(6)Estimatetobecloseto2eachpointofucosts2%pointsofGDP6-23ThetransitionfromthePCtotheAScurverequiresfoursteps:TranslateoutputtoemploymentLinkpricesfirmschargetocostsUsePhillipscurverelationshipbetweenWandECombine1-3toderiveupwardslopingAScurveFromthePhillipsCurvetotheASCurve

LinkpricestocostsFirmssupplyoutputatapricethatatleastcoverscostsofproductionAssumingNistheonlycostofproduction,ifeachunitofNproducesaunitsofoutput,thelaborcostsofproductionperunitisW/aFirmssetpriceasamarkup,z,onlaborcosts:

(7)6-24ThetransitionfromthePCtotheAScurverequiresfoursteps:TranslateoutputtoemploymentLinkpricesfirmschargetocostsUsePhillipscurverelationshipbetweenWandECombine1-3toderiveupwardslopingAScurveFromthePhillipsCurvetotheASCurve

TheAggregateSupplycurveCombining(2b),(6),and(7)yields:

(8)Oftenreplace(8)withanapproximateversion:(9)whichistheequationfortheaggregatesupplycurve6-25ThetransitionfromthePCtotheAScurverequiresfoursteps:TranslateoutputtoemploymentLinkpricesfirmschargetocostsUsePhillipscurverelationshipbetweenWandECombine1-3toderiveupwardslopingAScurveFromthePhillipsCurvetotheASCurve

6-26

Figure6-8showsAScurveimpliedbyequation(9)IfY>Y*,nextperiodtheAScurvewillshiftuptoAS’IfY<Y*,nextperiodASwillshiftdowntoAS’’NOTE:ThesearethesamepropertiesastheWNcurveSupplyShocks

6-27AsupplyshockisadisturbanceintheeconomywhosefirstimpactisashiftintheAScurveAnadversesupplyshockisonethatshiftsASinwards(asinFigure6-10)AsASshiftstoAS’,equilibriumshiftsfromEtoE’andpricesincreasewhileoutputfallsTheuatE’forceswagesandpricesdownuntilreturntoE,butprocessisslowSupplyShocks

6-28Aftertheshock:EconomyreturnstothefullemploymentlevelofemploymentPricelevelisthesameasitwasbeforetheshockNominalwagesareLOWERduetotheincreaseduattheonsetoftheshockRealwagesmustalsofallwherewistherealwageandWisthenominalwageSupplyShocks

6-29Figure6-10alsoshowstheimpactofADpolicyafteranadversesupplyshockSupposeGincreases(toAD’):EconomycouldmovetoE*ifincreaseenoughSuchshifts=“accommodatingpolicies”(accommodatethefallintherealwageattheexistingnominalwage)Addedinflation,althoughreduceufromASshockEvaluatingtheTradeoff

6-30Galluporganizationconductsopinionpollsasking:“Whatisthemostimportantproblemfacingthecountry?”UnemploymenthasbecomethemostimportantproblemWhataretherelativeeconomiccostsofinflationandunemployment?Unemployment

6-31Thegreatestcostofunemployment=lostproductionThiscostislarge:arecessioncaneasilycost3-5%ofGDPandhundredsofbillionsofdollarsOkun’slawstatesthat1extrapointofunemploymentcosts2%ofGDP[SeeFigure6-12]Costsborneunevenly,largelybythosewholosetheirjobsWorkersjustenteringthelaborforceandteenagersareamongstthehardesthitPoliticalBusinessCycleTheoryVotersworryaboutboththelevelandrateofchangeofunemploymentandinflationPublicworriesabout:RisingunemploymentInflationthatdiffersfromexpectationsTheseworriesinfluencetypesofpoliciesusedStudiesinteractionsbetweeneconomi