Post on 22-Dec-2015
transcript
Lectures in Macroeconomics- Charles W. Upton
A First Look at Business Cycles
Business Failures Counter-Cyclical New Business Starts Pro-Cyclical Unemployment Counter-Cyclical Average Work Week Pro-Cyclical Average Wage Rate Pro-Cyclical Capital Utilization Pro Cyclical GDP Pro-Cyclical
A First Look at Business Cycles
Peaks and Troughs
Peak
Trough
These periods are caused Business Cycles
What Causes Them?And What Can
(or Should) Be Done About
Them?
A First Look at Business Cycles
Counter-Cyclical andPro-Cyclical Indicators
Business Failures Counter-Cyclical New Business Starts Pro-Cyclical Unemployment Counter-Cyclical Average Work Week Pro-Cyclical Average Wage Rate Pro-Cyclical Capital Utilization Pro Cyclical GDP Pro-Cyclical
A First Look at Business Cycles
The Labor Market
SSRSLR
D
H*
w*
A First Look at Business Cycles
A Temporary Demand Decrease
D’
SSRSLR
D
H’ H*
w*
w’
A First Look at Business Cycles
A Temporary Demand Decrease
D’
SSRSLR
D
H’ H*
w*
w’
Wages Down
Hours of Work Down
A First Look at Business Cycles
A Temporary Demand Decrease
D’
SSRSLR
D
H’ H*
w*
w’
Wages Down
Hours of Work Down
GDP = AKL(1- ) Down
A First Look at Business Cycles
A Temporary Demand Decrease
D’
SSRSLR
D
H’ H*
w*
w’
Wages Down
Hours of Work Down
GDP = AKL(1- ) DownObviously a temporary demand increase will
have the opposite effect
A First Look at Business Cycles
Counter-Cyclical andPro-Cyclical Indicators
Business Failures Counter-Cyclical New Business Starts Pro-Cyclical Unemployment Counter-Cyclical Average Work Week Pro-Cyclical Average Wage Rate Pro-Cyclical Capital Utilization Pro Cyclical GDP Pro-Cyclical
A First Look at Business Cycles
Counter-Cyclical andPro-Cyclical Indicators
Business Failures Counter-Cyclical New Business Starts Pro-Cyclical Unemployment Counter-Cyclical Average Work Week Pro-Cyclical Average Wage Rate Pro-Cyclical Capital Utilization Pro Cyclical GDP Pro-Cyclical
The model seems to fit the facts
A First Look at Business Cycles
A Productivity Increase
SSRSLR
D
H*
w*
A First Look at Business Cycles
A Productivity Increase
D’
SSRSLR
D
H* H’
w*w’
A First Look at Business Cycles
A Productivity Increase
D’
SSRSLR
D
H* H’
w*w’
Wages Up
Hours of Work Up
GDP = AKL(1- ) Up
A First Look at Business Cycles
A Productivity Increase
D’
SSRSLR
D
H* H’
w*w’
A First Look at Business Cycles
Counter-Cyclical andPro-Cyclical Indicators
Business Failures Counter-Cyclical New Business Starts Pro-Cyclical Unemployment Counter-Cyclical Average Work Week Pro-Cyclical Average Wage Rate Pro-Cyclical Capital Utilization Pro Cyclical GDP Pro-Cyclical
Now
Patience
A First Look at Business Cycles
Getting Going SSR
SLR
D
w
H
A First Look at Business Cycles
Patience SSR
SLR
D
w
H
A First Look at Business Cycles
Stimulation SSR
SLR
D
w
H
D`
A First Look at Business Cycles
Stimulation SSR
SLR
D
w
H
D`While there is
something to this graph, life is not that
simple
A First Look at Business Cycles
Stimulation SSR
SLR
D
w
H
D`While there is
something to this graph, life is not that
simple
The course is not over
A First Look at Business Cycles
End
©2004 Charles W. Upton. All rights reserved