Lectures in Macroeconomics- Charles W. Upton Why the Phillips Curve.
Lectures in Macroeconomics- Charles W. Upton A Change in
-
date post
21-Dec-2015 -
Category
Documents
-
view
224 -
download
1
Transcript of Lectures in Macroeconomics- Charles W. Upton A Change in
![Page 1: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/1.jpg)
Lectures in Macroeconomics- Charles W. Upton
A Change in P
r
Y
M
Po
ro
Pick any point on the Y curve.
DY=SY
![Page 2: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/2.jpg)
A Change in Tsi
The Y and M Curves
P
r
Y
M
Po
ro
![Page 3: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/3.jpg)
A Change in Tsi
The Y Curve
P
r
Y
M
Po
ro
Pick any point on the Y curve.
DY=SY
![Page 4: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/4.jpg)
A Change in Tsi
The Y Curve
P
r
Y
M
Po
ro
Does the event (e.g. people become more confident about the future) mean DY>SY or
DY<SY?
DY=SY
![Page 5: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/5.jpg)
A Change in Tsi
The Y Curve
P
r
Y
M
Po
ro
Suppose DY>SY . To get back on the Y curve, the Auctioneer would have to raise r or P. Thus Y curve shifts up and to the right.
DY=SY
![Page 6: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/6.jpg)
A Change in Tsi
The M Curve
P
r
Y
M
Po
ro
Pick any point on the M curve.
DM=SM
![Page 7: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/7.jpg)
A Change in Tsi
The M Curve
P
r
Y
M
Po
ro
Does the event (e.g. people become more confident about the future) mean DM>SM or
DM<SM?
DM=SM
![Page 8: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/8.jpg)
A Change in Tsi
The M Curve
P
r
Y
M
Po
ro
DM=SM
Suppose DM>SM . To get back on the M curve, the Auctioneer would have to raise r or lower P. Thus M curve shifts down and to the right.
![Page 9: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/9.jpg)
A Change in Tsi
Some Problems
• Credit cards are outlawed– An increase in
• Drugs are legalized– A decrease in
![Page 10: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/10.jpg)
A Change in Tsi
A Change in
• If credit cards are outlawed, goes up.– More money is
required as a replacement for credit cards..
P
r
Y
M
Po
ro
![Page 11: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/11.jpg)
A Change in Tsi
A Change in
• If credit cards are outlawed, goes up.
• If drugs are legalized, goes down.– Less money is required
to avoid prosecution.
P
r
Y
M
Po
ro
![Page 12: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/12.jpg)
A Change in Tsi
A Change in
• If credit cards are outlawed, goes up.– More money is
required as a replacement for credit cards..
• If drugs are legalized, goes down.– Less money is required
to avoid prosecution.
P
r
Y
M
Po
ro
We do one: goes up.
![Page 13: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/13.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
P
r
Y
M
Po
ro
![Page 14: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/14.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
• DY<SY
P
r
Y
M
Po
ro
DY<SY
![Page 15: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/15.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
• DY<SY
P
r
Y
M
Po
ro
DY<SY
ii zinin
c)(1
1
![Page 16: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/16.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
• DY<SY
• The Auctioneer must raise DY
P
r
Y
M
Po
ro
DY<SY
![Page 17: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/17.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
• DY<SY
• The Auctioneer must raise DY
P
r
Y
M
Po
ro
DY<SYMemo to the auctioneer:
To cut DY, raise r
To raise DY lower r
![Page 18: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/18.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
• DY<SY
• The Auctioneer must raise DY
P
r
Y
M
Po
ro
DY<SY
![Page 19: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/19.jpg)
A Change in Tsi
A Change in
• Pick a point on the Y curve.
• DY<SY
• The Auctioneer must raise DY
• The Y curve shifts down and to the left
P
r
Y
M
Po
ro
DY<SY
![Page 20: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/20.jpg)
A Change in Tsi
A Change in
• Pick a point on the M curve.
P
r
Y
M
Po
ro
![Page 21: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/21.jpg)
A Change in Tsi
A Change in
• Pick a point on the M curve.
• DM>SM
P
r
Y
M
Po
ro
DM>SM
in
ni c
r
rm
1
The reduction in c is dominated by the increase in
![Page 22: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/22.jpg)
A Change in Tsi
A Change in
• Pick a point on the M curve.
• DM>SM
• The Auctioneer must lower DM
P
r
Y
M
Po
ro
DM>SM
![Page 23: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/23.jpg)
A Change in Tsi
A Change in
• Pick a point on the M curve.
• DM>SM
• The Auctioneer must lower DM
P
r
Y
M
Po
ro
DM>SMMemo to the auctioneer:
To cut DM, raise r
To raise DM lower r
![Page 24: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/24.jpg)
A Change in Tsi
A Change in
• Pick a point on the M curve.
• DM>SM
• The Auctioneer must lower DM
P
r
Y
M
Po
ro
DM>SM
![Page 25: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/25.jpg)
A Change in Tsi
A Change in
• Pick a point on the M curve.
• DM>SM
• The Auctioneer must lower DM
• The M curve shifts down and to the right
P
r
Y
M
Po
ro
DM>SM
![Page 26: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/26.jpg)
A Change in Tsi
A Change in
• The Y curve shifts down and to the left.
• The M curve shifts down and to right
P
r
Y
M
Po
ro
![Page 27: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/27.jpg)
A Change in Tsi
A Change in
• The Y curve down and to the left.
• The M curve shifts down and to right
• P down• Interest rate is
uncertain.
P
r
Y
M
Po
ro
![Page 28: Lectures in Macroeconomics- Charles W. Upton A Change in](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d605503460f94a41cf4/html5/thumbnails/28.jpg)
A Change in Tsi
End
©2003 Charles W. Upton. All rights reserved