November 2 class notes

November 2 class notes - November 2, 2010 The End of ISI:...

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November 2, 2010 The End of ISI: What Went Wrong? A. Economic Problems a. Debt b. Inflation c. Deepening d. Balance of payments e. Oil crisis f. ‘Washington Consensus’ g. Etc. Philip’s Curve o Says there is a trade off between unemployment and inflation If inflation is high, why might that slow down economic growth? o When there is rapid inflation, prices are going up more than wages can keep up with o More consumption o Less savings o Less capital accumulation When we have a government that is borrowing to pay back expenditures, then it should be the case that the price of a loan should be going up Up to the 70s, there have been rapidly increasing employment rates o Capital rose because of the employment rates o The government wants more employment and because the government gets more employment, then it catches up to them in terms of inflation “Things get even worse” o Not only do you have debt and inflation that is slowing economic growth but you also have a balance of payment problems that is
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This note was uploaded on 01/19/2011 for the course GVPT 451 taught by Professor Joelsimmons during the Fall '10 term at Maryland.

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November 2 class notes - November 2, 2010 The End of ISI:...

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