Macroeconomic policies Gang gong Copyright Notes: This electronic file is only used as a lecture notes for the student in this class It is not allowed to be used for presentation anywhere else without the permission from the author
Macroeconomic Policies Gang Gong Copyright Notes:This electronic file is only used as a lecture notes for the student in this class. It is not allowed to be used for presentation anywhere else without the permission from the author
Introduction The objective of this chapter is to move from theory to empiric. Specially, we shall study how macroeconomic policies can be applied to solve practical macroeconomic problems
Introduction • The objective of this chapter is to move from theory to empiric. Specially, we shall study how macroeconomic policies can be applied to solve practical macroeconomic problems
Introduction There are basically two macroeconomic problems on which the macroeconomic policy can have its effect Unemployment Inflation
Introduction • There are basically two macroeconomic problems on which the macroeconomic policy can have its effect. – Unemployment – Inflation
The relation between Inflation and Unemployment From our all market model as established in the last time, we could find a negative relation between inflation and unemployment(please consider how?) Yet. this is only reflected in a theoretical model. how about in empiric?
The Relation between Inflation and Unemployment • From our all market model as established in the last time, we could find a negative relation between inflation and unemployment (please consider how?) • Yet, this is only reflected in a theoretical model, how about in empiric?
The relation between Inflation and Unemployment The Original Phillips Curve: A. W. Phillips 1957) find a significant negative relation between unemployment and the growth rate of nominal wage. In particular. he estimates =+1 where w is the growth rate of wage(note that the estimated B is negative
The Relation between Inflation and Unemployment • The Original Phillips Curve: A. W. Phillips (1957) find a significant negative relation between unemployment and the growth rate of nominal wage. In particular, he estimates where w is the growth rate of wage (note that the estimated is negative. wt = +ut