The Current Recession
Lecture 1: Where are we? How did we get here?
What is a Recession?
A broad, deep, and sustained decline of the economy.
A period of the business cycle where the economy is contracting.
Typically last 12 month
Key takeaway: Borjas and Katz attempt to explain the connection between the growing
disadvantage in educational attainment of Mexican immigrants and the growing
disadvantage in relative wages. They find that (between 1940 and 2000) educational
Chapter 1 (The year in Review and the Years Ahead):
In 2005 the U.S economy grew by a strong 3.5% (in real GDP terms) despite 2
hurricanes, and even more significantly, despite the doubling of oil prices from
2003-2005 (which in itself decreased real GDP
Pages 66 to 85 of Elmendorf, Liebman, and Wilcox
- Greenspan against the government ownership of private equities
- Republicans hope to create lockbox to retain SS surpluses to pay down debt
- On-budget surplus for 10% t
1420 Midterm Study Guide
Where is the economy now and where are we going?
o Fiscal Deficit was 1.5% of GDP, last year it was 9% of GDP
o now between 1 and 2% in 80s it was 12%
o 9.4% , but if you include discouraged
Douglas Elmendorf, Jeffrey Liebman, and David Wilcox
Fiscal Policy and Social Security Policy During the 1990s
2.6 Budget Surpluses 1998 to 2000
2.6.1 1999 State of the Union Budget Framework
- proposed allocation of unified budget surpluses o
Fiscal Activism Would Speed a Recovery
(Coursepack p. 226-227)
Fiscal policy can stimulate demand by changing incentives as well as by increasing
Central banks act faster and more flexibly than parliaments.
- High interest rates a
Feldstein, Balancing the Goals of Health Care Provision and Financing (end)
Implications for Reforming HSAs
How HSAs now work
- similar to IRA or 401(k) in that funds deposited out of pretax income, and the income
accumulated is tax free
- also better th
Summary, Ec 1420, pp. 660-674
Some Economics of Global Warming
By Thomas Schelling
Magnitude of global warming in this century is in dispute.
How much of global warming is from human contribution?
Upper and lower bounds on projected temperature change are
Freeman, Richard B. and Katz, Lawrence F. Rising Wage Inequality:
The United States vs. other Advanced Countries
There was a large increase in income inequality in the U.S. in the 1980s: 1989
real incomes for the bottom 40% of families were the same as in
Tax Incidence (Council of Economic Advisors, pp. 457-462)
Applied Distributional Analysis and the Choice of Time Frame: Capital income taxes
seem like they would be highly progressive because only those with high incomes should
be able to afford investmen
Structural Reform of Social Security
Governments are looking to reform social security by shifting from a pure pay-as-you-go
tax-financed system to a mixed system that combines pay-as-you-go benefits with
investment-based personal retirem
Does Inflation Targeting Matter?
This section presents some background information regarding inflation targeting, but
most of it concerns their method of research.
- Its commonly believed that not only has inflation been low
Uncertainty and Conservatism
There is a great deal of uncertainty when measuring an activitys riskiness.
Government regulatory agencies tend to be very conservative when assigning an
activitys level of risk (i.e. they use the upper end of the range of ris