MONETFISCALPOLCLASS

MONETFISCALPOLCLASS - 1 SR Monetary (and Fiscal) Fed...

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Unformatted text preview: 1 SR Monetary (and Fiscal) Fed Structure, independence, goals, tools, reserves and money creation Balance Sheet Monetary Policy Fed-> Reserves/Ms->r->I,C,NX,D->y,p Cant push on a string -Liquidity Trap 1 Crisis Policies Fiscal Policy G, T ->D->y,p Multipliers Lags Auto Stabilizers / Structural Deficit In the News? 2 Course Issues Online Midterm next week 1 hour - Tuesday 10/19 6pm and Thursday 10/21 6pm. weeks 1-7 in 50 multiple choice questions more or less randomly drawn from hw 1-7. 3 Bus & Liberal arts career fair 10/15 Goldman 10/14? 2 FOMC Statement 9/21/2010 ..pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term. (see full) 4 Fiscal Policy Demand Management Short-run Keynesian Shift demand Stabilization, counter-cyclical Fiscal Policy change G, T for stabilization purposes 5 G D P,y (recession, mostly y) T (Y-T) C D P,y Multiplier effect Partial crowding out, maybe G i I or crowding in More Fiscal Policy SR Fiscal Policy Agg D Why too little private demand C,I G,T->D->Y, P (mostly y in recession) Congress, President Multipliers Y/ G=1/(1-mpc) impact of policy Y/ T=-mpc/(1-mpc) Balanced Budget Y/( G=- T)=1 Discretionary versus automatic stabilizers 6 Discretionary versus automatic stabilizers Full employment or structural deficits SR deficits Lags-recognition, implementation, impact Long Run Issues Partial crowding out, maybe G i I or crowding in deficits 3 Role of Fiscal Policy 2002 Walsh Recession 2001 Use is unusual why? Automatic Stabilizers - tax, spending State & local pro cyclical Lags (avg recession 11 mos) 7 implementation - long impact Fiscal Policy 2009 Leduc Monetary Policy First Why?...
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This note was uploaded on 02/08/2011 for the course ECONOMICS 220:103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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MONETFISCALPOLCLASS - 1 SR Monetary (and Fiscal) Fed...

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