Post on 14-Dec-2015
Lecture 12
Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment
1
2
Lecture 12. Aggregate Supply
The Basic Theory of Aggregate Supply
3
Lecture 12. Aggregate Supply
1. The Sticky-Price Model
2. The Imperfect-Information Model
4
Lecture 12. Aggregate Supply
Case Study: International Differences in the Aggregate Supply Curve
5
Lecture 12. Aggregate Supply
Summary and Implications
6
Lecture 12. Aggregate Supply
Summary and Implications
7
Lecture 12. Aggregate Supply
Inflation, Unemployment, and the Phillips Curve
8
Lecture 12. Aggregate Supply
• The History of the Modern Phillips Curve
• Adaptive Expectations and Inflation Inertia
• Two Causes of Rising and Falling Inflation
9
Lecture 12. Aggregate Supply
Case Study: Inflation and Unemploymentin the United States
10
Lecture 12. Aggregate Supply
The Short-Run Tradeoff Between Inflationand Unemployment
11
Lecture 12. Aggregate Supply
The Short-Run Tradeoff Between Inflationand Unemployment
12
Lecture 12. Aggregate Supply
FYI: How Precise Are Estimates of the Natural Rate of Unemployment?
13
Lecture 12. Aggregate Supply
• Disinflation and the Sacrifice Ratio• Rational Expectations and the Possibility of Painless Disinflation• Case Study: The Sacrifice Ratio in Practice
14
Lecture 12. Aggregate Supply
• Hysteresis and the Challenge to the Natural-Rate Hypothesis
• Hysteresis and the Long-Run Phillips Curve
15
Lecture 12. Aggregate Supply
The Mother of All Models
16
Lecture 12. Aggregate Supply
Conclusion