8/4/2019 Short-Run Economic Fluctuationsss
1/17
Short-run Economic Fluctuations
8/4/2019 Short-Run Economic Fluctuationsss
2/17
Todays Topics
1 The Impact of Recession on Businesses
Did the Global Financial Crisis Produce a
Recession in Australia ?
The Influence of Recession on Unemployment &
Inflation
Federal Elections & the State of the Economy
8/4/2019 Short-Run Economic Fluctuationsss
3/17
Recession & Expansion
8/4/2019 Short-Run Economic Fluctuationsss
4/17
Real GDP growth and the unemployment rate
Recession & Expansion
8/4/2019 Short-Run Economic Fluctuationsss
5/17
The Impact of Recessionon Businesses
Produce
durable goods
Industry
ProduceNon-durablegoods
8/4/2019 Short-Run Economic Fluctuationsss
6/17
Calculation ofGDP Growth Rate
Base year ---- 1975
GDP Growth rate
= (real GDP of current year-real GDP ofbase year) / real GDP of base year
8/4/2019 Short-Run Economic Fluctuationsss
7/17
Did the Global Financial Crisis Producea Recession in Australia ?
Real GDP Growth Rate, Australia ( part 1)
Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour
http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html8/4/2019 Short-Run Economic Fluctuationsss
8/17
Real GDP Growth Rate, Australia ( part 2)
Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour
Did the Global Financial Crisis Producea Recession in Australia ?
http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html8/4/2019 Short-Run Economic Fluctuationsss
9/17
Real GDP Growth Rate, Australia ( part 3)
Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour
Did the Global Financial Crisis Producea Recession in Australia ?
http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html8/4/2019 Short-Run Economic Fluctuationsss
10/17
Real GDP Growth Rate, Australia ( part 4)
Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour
Did the Global Financial Crisis Producea Recession in Australia ?
http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html8/4/2019 Short-Run Economic Fluctuationsss
11/17
The Influence of Recession onUnemployment & Inflation
the natural rate of unemployment
the cyclical rate ofunemployment
inflation rate
Recession
8/4/2019 Short-Run Economic Fluctuationsss
12/17
Natural Rate ofUnemployment (NRU)
Definition:The rate of unemployment that prevails
when cyclical unemployment is zero.
or
Natural rate of unemployment (u*)=frictional + structural
8/4/2019 Short-Run Economic Fluctuationsss
13/17
Cyclical rate ofunemployment
Definition:the extra unemployment that occurs
during periods of recessions.
Contractionary GapOutput gap Cyclical unemployment
y-y * < 0 u - u* > 0Negative Positive
8/4/2019 Short-Run Economic Fluctuationsss
14/17
Inflation
8/4/2019 Short-Run Economic Fluctuationsss
15/17
Okun's Law
%Output gap = - x %Cyclical unemploymentThis can also be expressed as:
(y-y*) / y* = -(u-u*)
where:
y is actual output
y* is potential output ( full-employment output)
u is actual unemployment
u*is the natural rate of unemployment
is a constant, derived from regression show the link between
deviations from natural output & natural unemployment; for the US, is estimated to be about 2.0, while in Australia, it is about 1.6
8/4/2019 Short-Run Economic Fluctuationsss
16/17
Federal Elections &the State of the Economy
Whats yourprediction?
8/4/2019 Short-Run Economic Fluctuationsss
17/17
www.themegallery.c
Thank you !
Top Related