Chapter 1

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

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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 s Macroeconomists study economies as whole entities s Main variables we are concerned with: s output – how much an economy is producing s unemployment rate – how many workers in the economy do not have a job s inflation rate – how fast prices are growing
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3 A Look at (some of) the World s Today we will take a quick look at some of the world economies and the macroeconomic issues that they face s The countries in question are: s U.S. s EU s Japan s 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. s The U.S. has had, on average, the fastest output growth. Notice 2001 – a recession year, following a boom of the 1990’s. s 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. s On average, between 1960-2000 the U.S. and Europe were roughly similar in terms of unemployment. s However, since 1980’s, Europe’s unemployment has risen drastically and outpaced the U.S. noticeably. s 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. s The U.S. is has experienced a bout of inflation growth. s The EU-15 has kept inflation largely stable, and much lower than historical average. s Japan was (until recently) experiencing deflation : prices were actually falling.
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7 Macroeconomic Policy Issues in (some of) the World Today s United States: s The housing market (subprime crisis) s Credit crunch s Weak dollar s Rising healthcare costs s Unsustainability of Social Security? s
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This note was uploaded on 04/29/2008 for the course ECON 110A taught by Professor Staff during the Spring '08 term at UCSD.

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

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