lec_26_111B - ECN 111B: US Economic History since the ECN...

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Lecture 26 Lecture 26 The Great Inflation, The Productivity Slowdown The Great Inflation, The Productivity Slowdown and the Great Moderation and the Great Moderation ECN 111B: US Economic History since the ECN 111B: US Economic History since the Civil War Civil War Winter 2010 Winter 2010
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Lecture 26 Outline Lecture 26 Outline Government regulation The Great Inflation The Productivity Slowdown The Great Moderation
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KEY Readings for Today’s KEY Readings for Today’s Lecture Lecture Essential Reading: Walton and Rockoff relevant parts of ch. 27 and ch. 28 Suggested but not essential reading on the subprime crisis Gary Gorton: Questions and Answers about the Financial Crisis (posted to smartsite)
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Prior to 1930s the government’s involvement in regulation was as follows Interstate commerce commission, the Fed, adulterated food… Post WWII we see a whole new set of regulatory bodies Consumer protection and many others DoJ, bank regulation Is regulation economically optimal? May prevent myopic consumers from hurting themselves or avoid negative spillovers. But regulation has costs: restricts output and raises prices, bureaucratic costs, moral judgments on liberty Regulation in the Economy
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The Great Inflation The Great Inflation From the mid-1960s inflation began to rise. In the late 1960s the rates were upwards of 5% but by the late 1970s inflation nears The impact on interest rates (nominal) was great. They surged to near 20%.
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What Caused the Great Inflation? What Caused the Great Inflation? The prevailing view at the time in economics was there was a tradeoff between unemployment and inflation. This was called the Philips Curve . But, as inflation rose and unemployment stayed the same, the view
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This note was uploaded on 03/11/2010 for the course ECN ECN111b taught by Professor Meissner during the Winter '10 term at UC Davis.

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lec_26_111B - ECN 111B: US Economic History since the ECN...

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