SlideServe
Télécharger Obtenir Pro
Menu
Accueil Pro
Préférences
ApparenceLight Aide et commentaires
© SlideServe · v2026

Strategies for Addressing Unemployment and Inflation Dynamics through Fiscal and Monetary Policies

mgoddard avatar
mgoddard
25 diapositives · 287 Views · Jan 06, 2020

Explore the causes and fixes for inflation and unemployment using expansionary or contractionary policies, delving into supply-side and demand-side economics, the Philips Curve, and potential policy trade-offs. Dive into the current unemployment and inflation rates, monetary policy tools such as open market operations, and fiscal policy considerations. Uncover the basics of Keynesian economics and fiscal policy challenges. Reflect on the upsides and downsides of various economic policies and consider alternatives to traditional Keynesian interventions.

#strategies for addressing unemployment and inflation dynamics through fiscal and monetary policies #strategies for addressing unemployment and inflation dynamics through fiscal and monetary policies ppt #powerpoint #presentation
Strategies for Addressing Unemployment and Inflation Dynamics through Fiscal and Monetary Policies - slide 1
01 / 25Strategies for Addressing Unemployment and Inflation Dynamics through Fiscal and Monetary Policies
1 / 17

Télécharger la présentation

Strategies for Addressing Unemployment and Inflation Dynamics through Fiscal and Monetary Policies
Une image / un lien ci-dessous est fourni (tel quel) pour télécharger la présentation

Politique de téléchargement : le contenu du site vous est fourni TEL QUEL pour votre information et votre usage personnel ; il ne peut être vendu, concédé sous licence ni partagé sur d’autres sites sans l’accord de son auteur.Le contenu vous est fourni TEL QUEL, pour votre information et votre usage personnel uniquement. Téléchargez la présentation en cliquant sur ce lien. Lors du téléchargement, si vous ne parvenez pas à télécharger une présentation, l’éditeur a peut-être supprimé le fichier de son serveur.Pendant le téléchargement, si vous ne parvenez pas à obtenir une présentation, le fichier a peut-être été supprimé par l’éditeur.

F I N

Plus de contenu associé

Transcription de la présentation

  1. Topic 5 Using Monetary and Fiscal Policy to Fight Unemployment and Inflation

  2. Inflation • Cause: too much economic activity • There are too few factors or production to support the demand for production, prices rise • Fix: slow down spending • Contractionary fiscal and monetary policy (decrease G, increase Tx, increase RRR, sell bonds, increase federal funds rate)

  3. Unemployment • Cause: not enough economic activity • The economy’s factors of production could support more output • Fix: increase economic output • Expansionary monetary and fiscal policy (increase G, decrease Tx, lower RRR, buy bonds, lower federal funds rate)

  4. Some schools of thought • Supply side economics – tax breaks and incentives for producers are the most effective way to stimulate the economy • Demand side economics – tax breaks and incentives for consumers, plus government spending, is the best way to stimulate the economy

  5. Trade off – The Philips Curve • Graph the Philips Curve – In class • Vertical axis for inflation, horizontal axis for unemployment • How to incorporate Natural Rate of Unemployment? • How to incorporate Inflationary Expectations? • As the labor market becomes tighter, what happens to prices?

  6. Changes in Philips Curve • Changes in the Natural Rate of Unemployment? • Monster.com? Minimum wage? Culture of changing jobs? • Changes in inflationary expectations? • People expect higher or lower inflation • Changes in worker bargaining power? • Ability to move production over seas

  7. Current Unemployment & Inflation http://www.google.com/publicdata/home

  8. Current Unemployment & Inflation • Unemployment is around 10% • Inflation is low, about 2.0% per year Links: http://www.wolframalpha.com/input/?i=usa+unemployment+rate http://www.wolframalpha.com/input/?i=usa+inflation+rate

  9. So, where are we on the Philips Curve?What policies help?

  10. Monetary Policy • Open Market Operations (to alter the interest rate) • Required Reserve Ratio (RRR) • Federal Funds Rate

  11. 12/08 Rates for US Treasury Bonds COUPON MATURITY YEILD 3-Month 0.000 03/26/2009 0.06 6-Month 0.000 06/25/2009 0.22 12-Month 0.000 12/17/2009 0.36 2-Year 0.875 12/31/2010 0.88 3-Year 1.125 12/15/2011 1.06 5-Year 1.500 12/31/2013 1.51 10-Year 3.750 11/15/2018 2.13 30-Year 4.500 05/15/2038 2.61

  12. US Treasury Bill Rate

  13. Reserve Requirements Total Deposits RRR $0 to $10.3M 0% $10.3M to $44.4M 3% > $44.4M 10%

  14. Fiscal Policy • Government spending • Taxes • Without much room to play with monetary policy, the government is relying heavily on fiscal policy What does the government spend money on? http://www.federalbudget.com/

  15. Projected Deficit (Wash Post)

  16. Keynesian Economics • The fiscal policies we focus on in class are key tools in Keynesian Economics. • John Maynard Keynes (1883-1946) advocated using government spending to smooth out the business cycle. • The key policy recommendation of Keynesian theory is to use deficit spending to pull an economy out of a recession.

  17. Downsides of Keynesian Spending • Expensive • The wrong type of spending? • Spending chosen by politicians and bureaucrats • Short term projects, not long term solutions • Real world multiplier may be less than 1 • Encourages irresponsible or inefficient behavior • Politically infeasible • Avoids benefits of a recession (!?!?!?)

  18. Similar issues with monetary policies: • Artificially low interest rates encourage the wrong type of investment • Lower return projects • More risky projects • Less focus on innovation • Artificially low interest rates make it “too easy” to borrow money for consumption • Might pull us out of the recession more quickly, but result in a lower long-run growth rate

  19. Politically infeasible? • Supporters of Keynesian motivated government spending wanted a bigger bailout • Opponents thought the spending was already too high • Quickly passed laws allow for more favors, waste, and other bad policies • The outcome of the policy was/is uncertain • Any way around this? • Dictator • Automatic spending that kicks in: i.e., unemployment insurance

  20. Upsides to a recession? • Survival of the fittest • Struggling businesses go under, resources redirected • People get retraining, better education • Political pressure to fix or change bad policy • Market bubbles burst, prices adjust • Others?

  21. Alternatives to Keynesian Spending • Hands off. Let the economy fix itself. • Implement better policy to help employers adjust to changing markets, and investors make better decisions • Economies must be able to adjust to government or market induced shocks to employment • Better quality regulation, taxes, government spending • transparency • incentives