曼昆第10版课件mankiw10e-lecture-slides-ch16

AlternativePerspectivesonStabilizationPolicyMacroeconomicsN.GregoryMankiw©2019WorthPublishers,allrightsreservedINTHISCHAPTER,YOUWILLLEARN:abouttwopolicydebates:Shouldpolicybeactiveorpassive?Shouldpolicybebyruleordiscretion?Question1Shouldpolicybeactiveorpassive?GrowthrateofU.S.realGDPIncreaseinunemploymentduringrecessionspeaktroughincreaseinno.ofunemployedpersons(millions)July1953May19542.11Aug1957April19582.27April1960February19611.21December1969November19702.01November1973March19753.58January1980July19801.68July1981November19824.08July1990March19911.67March2001November20011.50December2007June20096.14ArgumentsforactivepolicyRecessionscauseeconomichardshipformillionsofpeople.TheEmploymentActof1946:

“ItisthecontinuingpolicyandresponsibilityoftheFederalGovernmentto…promotefullemploymentandproduction.”Themodelofaggregatedemandandsupply(Chaps.10–14)showshowfiscalandmonetarypolicycanrespondtoshocksandstabilizetheeconomy.ArgumentsagainstactivepolicyPoliciesactwithlong&variablelags,including:insidelag:

thetimebetweentheshockandthepolicyresponse.takestimetorecognizeshocktakestimetoimplementpolicy,especiallyfiscalpolicyoutsidelag:

thetimeittakesforpolicytoaffecteconomy.Ifconditionschangebeforepolicy’simpactisfelt,

thepolicymaydestabilizetheeconomy.Automaticstabilizersdefinition:

policiesthatstimulateordepresstheeconomywhennecessarywithoutanydeliberatepolicychange.Designedtoreducethelagsassociatedwithstabilizationpolicy.Examples:incometaxunemploymentinsurancewelfareForecastingthemacroeconomy,part1Becausepoliciesactwithlags,policymakersmustpredictfutureconditions.Twowayseconomistsgenerateforecasts:Leadingeconomicindicators(LEI)

dataseriesthatfluctuateinadvanceoftheeconomyMacroeconometricmodels

Large-scalemodelswithestimatedparametersthatcanbeusedtoforecasttheresponseofendogenousvariablestoshocksandpoliciesTheLEIindexandrealGDP,19602sourceofLEIdata:

TheConferenceBoardTheLEIindexandrealGDP,1970ssourceofLEIdata:

TheConferenceBoardTheLEIindexandrealGDP,1980ssourceofLEIdata:

TheConferenceBoardTheLEIindexandrealGDP,1990ssourceofLEIdata:

TheConferenceBoardMistakesforecastingthe1982recessionForecastingthemacroeconomy,part2Becausepoliciesactwithlags,policymakersmustpredictfutureconditions.Theprecedingslidesshowthattheforecastsareoftenwrong.Thisisonereasonwhysomeeconomistsopposepolicyactivism.TheLucascritiqueDuetoRobertLucaswhowonNobelPrizein1995forhisworkonrationalexpectations.Forecastingtheeffectsofpolicychangeshasoftenbeendoneusingmodelsestimatedwithhistoricaldata.Lucaspointedoutthatsuchpredictionswouldnotbevalidifthepolicychangealtersexpectationsinawaythatchangesthefundamentalrelationshipsbetweenvariables.AnexampleoftheLucascritiquePrediction(basedonpastexperience):

Anincreaseinthemoneygrowthratewillreduceunemployment.TheLucascritiquepointsoutthatincreasingthemoneygrowthratemayraiseexpectedinflation,inwhichcaseunemploymentwouldnotnecessarilyfall.TheJury’sout…LookingatrecenthistorydoesnotclearlyanswerQuestion1:It’shardtoidentifyshocksinthedata.It’shardtotellhowoutcomeswouldhavebeendifferenthadactualpoliciesnotbeenused.Question2Shouldpolicybeconductedbyruleordiscretion?Rulesanddiscretion:BasicconceptsPolicyconductedbyrule:

Policymakersannounceinadvancehowpolicywillrespondinvarioussituationsandcommitthemselvestofollowingthrough.Policyconductedbydiscretion:

Aseventsoccurandcircumstanceschange,policymakersusetheirjudgmentandapplywhateverpoliciesseemappropriateatthetime.Argumentsforrules,part1Distrustofpolicymakersandthepoliticalprocessmisinformedpoliticianspoliticians’interestssometimesnotthesameastheinterestsofsocietyArgumentsforrules,part2ThetimeinconsistencyofdiscretionarypolicyDefinition:Ascenarioinwhichpolicymakershaveanincentivetorenegeonapreviouslyannouncedpolicyonceothershaveactedonthatannouncement.Destroyspolicymakers’credibility,therebyreducingeffectivenessoftheirpolicies.Examplesoftimeinconsistency,part11. Toencourageinvestment,thegovernmentannouncesitwillnottaxincomefromcapital.Butoncethefactoriesarebuilt,thegovernmentrenegesinordertoraisemoretaxrevenue.Examplesoftimeinconsistency,part22. Toreduceexpectedinflation,thecentralbankannouncesitwilltightenmonetarypolicy.Butfacedwithhighunemployment,thecentralbankmaybetemptedtocutinterestrates.Examplesoftimeinconsistency,part33. Aidisgiventopoorcountriescontingentonfiscalreforms.Thereformsdonotoccur,butaidisgivenanyway,becausethedonorcountriesdonotwantthepoorcountries’citizenstostarve.MonetarypolicyrulesConstantmoneysupplygrowthrateAdvocatedbymonetarists.Stabilizesaggregatedemandonlyifvelocityisstable.TargetgrowthrateofnominalGDPAutomaticallyincreasemoneygrowthwhenevernominalGDPgrowsslowerthantargeted;decreasemoneygrowthwhennominalGDPgrowthexceedstarget.TargettheinflationrateAutomaticallyreducemoneygrowthwheneverinflationrisesabovethetargetrate.Manycountries’centralbanksnowpracticeinflationtargetingbutallowthemselvesalittlediscretion.ShouldtheFederalReservechangeitsinflationtargetof2%?CentralbankindependenceApolicyruleannouncedbycentralbankwillworkonlyiftheannouncementiscredible.Credibilitydependsinpartondegreeofindependenceofcentralbank.InflationandcentralbankindependenceCHAPTERSUMMARY,PART1Advocatesofactivepolicybelieve:frequentshocksleadtounnecessaryfluctuationsin