曼昆第10版课件mankiw10e-lecture-slides-ch10

IntroductiontoEconomicFluctuationsMacroeconomicsN.GregoryMankiw©2019WorthPublishers,allrightsreservedINTHISCHAPTER,YOUWILLLEARN:FactsaboutthebusinesscycleHowtheshortrundiffersfromthelongrunAnintroductiontoaggregatedemandAnintroductiontoaggregatesupplyintheshortrunandinthelongrunHowthemodelofaggregatedemandandaggregatesupplycanbeusedtoanalyzetheshort-runandlong-runeffectsof“shocks.”FactsaboutthebusinesscycleGDPgrowthaverages3–3.5%peryearoverthelongrun,withlargefluctuationsintheshortrun.ConsumptionandinvestmentfluctuatewithGDP,butconsumptiontendstobelessvolatileandinvestmentmorevolatilethanGDP.Unemploymentrisesduringrecessionsandfallsduringexpansions.Okun’slaw:thenegativerelationshipbetweenGDPandunemploymentGrowthratesofrealGDP,consumptionGrowthratesofrealGDP,consump.,investmentPercentchangefrom4quartersearlierUnemploymentOkun’slawIndexofleadingeconomicindicatorsPublishedmonthlybytheConferenceBoard.Aimstoforecastchangesineconomicactivity6–9monthsintothefuture.Usedinplanningbybusinessesandgovernment,despitenotbeingaperfectpredictor.ComponentsoftheLEIindexAverageworkweekinmanufacturingInitialweeklyclaimsforunemploymentinsuranceNewordersforconsumergoodsandmaterialsNeworders,nondefensecapitalgoodsISMnewordersindexNewbuildingpermitsissuedIndexofstockpricesLendingcreditindexYieldspread(10-yearminus3-month)onTreasuriesIndexofconsumerexpectationsIndexofleadingeconomicindicators,1970–2012TimehorizonsinmacroeconomicsLongrun

Pricesareflexible,respondingtochangesinsupplyordemand.Shortrun

Manypricesare“sticky”atapredeterminedlevel.Theeconomybehavesmuchdifferentlywhenpricesaresticky.Recapofclassicalmacrotheory(Chapters3-9)Outputisdeterminedbythesupplyside:suppliesofcapital,labortechnologyChangesindemandforgoodsandservices(C,I,G)onlyaffectprices,notquantities.Assumescompletepriceflexibility.Appliestothelongrun.Whenpricesaresticky...outputandemploymentalsodependondemand,whichisaffectedby:fiscalpolicy(GandT)monetarypolicy(M)otherfactors,likeexogenouschangesinCorIThemodelofaggregatedemandandsupplyTheparadigmmostmainstreameconomistsandpolicymakersusetothinkabouteconomicfluctuationsandpoliciestostabilizetheeconomyShowshowthepricelevelandaggregateoutputaredeterminedShowshowtheeconomy’sbehaviorisdifferentintheshortrunandinthelongrunAggregatedemandTheaggregatedemandcurveshowstherelationshipbetweenthepricelevelandthequantityofoutputdemanded.Forthischapter’sintrototheAD/ASmodel,weuseasimpletheoryofaggregatedemandbasedonthequantitytheoryofmoney.Chapters10–12developthetheoryofaggregatedemandinmoredetail.ThequantityequationasaggregatedemandFromChapter4,recallthequantityequation:MV

=PYForgivenvaluesofMandV,thisequationimpliesaninverserelationshipbetweenPandY...Thedownward-sloping

AD

curveAnincreaseinthepricelevelcausesafallinrealmoneybalances(M/P),causingadecreaseinthedemandforgoodsandservices.ShiftingtheADcurveAggregatesupplyinthelongrunRecallfromChapter3:Inthelongrun,outputisdeterminedbyfactorsuppliesandtechnologyisthefull-employmentornaturallevelofoutput,atwhichtheeconomy’sresourcesarefullyemployed.“Fullemployment”meansthatunemploymentequalsitsnaturalrate(notzero).Thelong-runaggregatesupplycurveLong-runeffectsofanincreaseinMAggregatesupplyintheshortrunManypricesarestickyintheshortrun.Fornow(andthroughChapter12),weassumeallpricesarestuckatapredeterminedlevelintheshortrun.firmsarewillingtosellasmuchatthatpricelevelastheircustomersarewillingtobuy.Therefore,theshort-runaggregatesupply(SRAS)curveishorizontal.Theshort-runaggregatesupplycurveTheSRAScurveishorizontal:Thepricelevelisfixedatapredeterminedlevel,andfirmssellasmuchasbuyersdemand.Short-runeffectsofanincreaseinMFromtheshortruntothelongrunOvertime,pricesgraduallybecome“unstuck.”Whentheydo,willtheyriseorfall?Theadjustmentofpricesiswhatmovestheeconomytoitslong-runequilibrium.Theshort-andlong-runeffectsofΔM

>0Howshocking!shocks:exogenouschangesinaggregatesupplyordemandShockstemporarilypushtheeconomyawayfromfullemployment.example:exogenousdecreaseinvelocityIfthemoneysupplyisheldconstant,adecreaseinVmeanspeoplewillbeusingtheirmoneyinfewertransactions,causingadecreaseindemandforgoodsandservices.TheeffectsofanegativedemandshockADshiftsleft,depressingoutputandemploymentintheshortrun(B).Overtime,pricesfall,andtheeconomymovesdownitsdemandcurvetowardfullemployment(C).SupplyshocksAsupplyshock

altersproductioncosts,affectsthepricesthatfirmscharge(alsocalledpriceshocks).Examplesofadversesupplyshocks:Badweatherreducescropyields,pushingupfoodprices.Workersunionize,negotiatewageincreases.Newenvironmentalregulationsrequirefirmstoreduceemissions.Firmschargehigherpricestohelpcoverthecostsofcompliance.Favorablesupplyshockslowercostsandprices.CASESTUDY:The1970soilshocks,part1Early1970s:OPECcoordinatedareductioninthesupplyofoil.Oilpricesrose11%in197368%in197416%in1975Suchsharpoilpriceincreasesaresupplyshocksbecausetheysignificantlyimpactproductioncostsandprices.CASESTUDY:The1970soilshocks,part2TheoilpriceshockshiftsupSRAS,causingoutputandemploymenttofall(B).Intheabsenceoffurtherpriceshocks,priceswillfallovertime,andeconomymovesbacktowardfullemployment(A).CASESTUDY:The1970soilshocks,part3Predictedeffects

oftheoilshock:inflation#output$unemployment#…andthenagradualrecoveryCASESTUDY:The1970soilshocks,part4Late1970s:

Astheeconomywasrecovering,oilpricesshotupagain,causinganotherhugesupplyshock!CASESTUDY:The1980soilshocks1980s:

Afavorablesupplyshock—asignificantfallinoilprices.Asthemodelpredicts,inflationandunemploymentfell.Stabilizationpolicystabilizationpolicy:policyactionsaimedatreducingtheseverityofshort-runeconomicfluctuations.example:usingmonetarypolicytocombattheeffectsofadversesupplyshocksStabilizingoutputwithmonetarypolicy,part1TheadversesupplyshockmovestheeconomytopointB.Stabilizingoutputwithmonetarypolicy,part2ButtheFedaccommodatestheshockbyraisingaggregatedemand(C).results:

P

ispermanentlyhigher,butYremainsatitsfull-employmentlevel.CHAPTER