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Chapter 1 - Macroeconomics A Tour of the World Prof Irina A...

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Macroeconomics: A Tour of the World Prof. Irina A. Telyukova UCSD Econ 110A Spring 2008
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2 Main Macroeconomic Variables square6 Macroeconomists study economies as whole entities square6 Main variables we are concerned with: square6 output – how much an economy is producing square6 unemployment rate – how many workers in the economy do not have a job square6 inflation rate – how fast prices are growing
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3 A Look at (some of) the World square6 Today we will take a quick look at some of the world economies and the macroeconomic issues that they face square6 The countries in question are: square6 U.S. square6 EU square6 Japan square6 China, India
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4 Output Growth Rate Comparison -0.3 1.1 1.6 2002 1.8 1.1 2.5 2003 2.3 2.3 3.9 2004 2.6 1.5 3.2 2005 2.2 2.7 3.4 2006 4.7 3.1 3.5 60-00 1.4 2.0 Japan 2.3 2.6 EU-15 3.9 1.8 U.S. 94-00 2007 Source: BEA for the U.S.; Eurostat for EU; OECD for Japan. square6 The U.S. has had, on average, the fastest output growth. Notice 2001 – a recession year, following a boom of the 1990’s. square6 Japan, on average, outpaced the EU-15 before 2000, but less clear since.
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5 Unemployment Rate Comparison 5.4 7.8 5.8 2002 5.3 8.0 6.0 2003 4.7 8.1 5.5 2004 4.4 7.9 5.1 2005 4.1 7.4 4.6 2006 2.0 5.8 6.1 60-00 3.7 3.9 Japan 9.0 7.4 EU-15 4.9 4.7 U.S. 94-00 2007 Source: BEA for the U.S.; Eurostat for EU; OECD for Japan. square6 On average, between 1960-2000 the U.S. and Europe were roughly similar in terms of unemployment. square6 However, since 1980’s, Europe’s unemployment has risen drastically and outpaced the U.S. noticeably. square6 Japan has had historically low unemployment, but less so recently (though on a decline again).
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6 Inflation Rate Comparison -1.2 2.1 1.6 2002 -1.2 2.0 2.3 2003 -2.5 2.0 2.7 2004 -2.0 2.1 3.4 2005 0.2 2.2 3.2 2006 5.1 5.4 3.9 60-00 -0.1 ~0.0 Japan 2.0 2.7 EU-15 1.8 2.7 U.S. 94-00 2007 Source: BEA; Eurostat; OECD and The Economist . CPI-based. square6 The U.S. is has experienced a bout of inflation growth. square6 The EU-15 has kept inflation largely stable, and much lower than historical average. square6 Japan was (until recently) experiencing deflation : prices were actually falling.
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7 Macroeconomic Policy Issues in (some of) the World Today square6 United States: square6 The housing market (subprime crisis) square6 Credit crunch square6 Weak dollar square6 Rising healthcare costs square6 Unsustainability of Social Security?
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