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Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in...

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Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy
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Page 1: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

Chapter 14

Stabilization Policy in the Closed and Open Economy

Page 2: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-2

Figure 14-1 A Flowchart Showing the Relationship Between Policy Instruments, Policy Targets, and Economic Welfare

Page 3: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-3

Figure 14-2 The Percent Change in Real GDP Following a 1 Percentage Point Change in the Treasury Bill Rate, Three Intervals, 1961–2004

Page 4: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-4

Figure 14-3 The Log Output Ratio and the Moving Average of its Absolute Value, 1960–2004 (1 of 2)

Page 5: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-5

Figure 14-3 The Log Output Ratio and the Moving Average of its Absolute Value, 1960–2004 (2 of 2)

Page 6: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-6

Figure 14-3 The Log Output Ratio and the Moving Average of its Absolute Value, 1960–2004

Page 7: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-7

Figure 14-4 The Federal Funds Interest Rate and the Log Output Ratio, 1980–2005

Page 8: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-8

Figure 14-5 The Actual Federal Funds Rate and Interest Rates Calculated by Two Versions of the Taylor Rule, 1980–2004

Page 9: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-9

Table 14-1 Assessing Alternative Policy Rules (1 of 2)

Page 10: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-10

Table 14-1 Assessing Alternative Policy Rules (2 of 2)

Page 11: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-11

Table 14-1 Assessing Alternative Policy Rules

Page 12: Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Stabilization Policy in the Closed and Open Economy.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 14-12

International Perspective The Debate About the Euro


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