14.02_lecture_1

14.02_lecture_1 - Fall Fall 2009 14.02 Principles of...

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Fall 2009 14.02 Principles of Macroeconomics eronica uerrieri Veronica Guerrieri
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What Macroeconomics is about? Macroeconomics studies the structure of aggregate economies and the impact of policies on their performance. What determines economic fluctuations? ( business cycle ) hy some countries grow faster than others ? onomic growth Why some countries grow faster than others ? ( economic growth ) What causes unemployment ? What drives prices changes? ( inflation ) What is the role of economic policies and the government? ( monetary and fiscal policies ) How being part of a global economic system affects the economy of a country? 2
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Historical Real GDP: 1970Q1 – 2009Q2 Black line - trend in real GDP over time (black axis) Red line - trend in real GDP growth (percentage change in real GDP) over time 3 (right axis) Shaded areas represent “official” recession dates (as calculated by National Bureau of Economic Research)
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What is a Recession? “Official Rule of Thumb” - 2 or more quarters of negative real GDP growth NOT NECESSARY THE CASE! Most Economies are usually not in recession – U.S. average postwar expansion: 50 months – U.S. average postwar recession: 11 months – The 1990s experienced the longest expansion since 1850 (the second longest was 106 months ; 961 969) 1961-1969) Great Moderation : after the mid-’80s, expansions have become more stable and recessions less frequent and less severe What about the current recession ? Is the Great Moderation ended?
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This note was uploaded on 10/25/2009 for the course 14 14.02 taught by Professor Geurrieri during the Fall '09 term at MIT.

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14.02_lecture_1 - Fall Fall 2009 14.02 Principles of...

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