中山大学《宏观经济学》课件-第17章PolicyImplement.pptxVIP

2023/7/271Chapter 17Policy Implement中山大学《宏观经济学》 2023/7/272Do stabilization policies work? 2023/7/273YTimeT0T1Y* Initially, potential output Y*. T0: output falls. T1: an expansionary policy. When output falls permanently, the policy works. 2023/7/274YTimeT0T1Y* Initially, full employment with output Y*. T0: output falls. T1: an expansionary policy. T2: a tight policy. T2 When output falls temporally, the policies disturb economy 2023/7/275OutlinePolicy lagsUncertaintyRules, discretion and dynamic Inconsistency 2023/7/276Policy lagPolicy lag: the time between a disturbance occurs and corresponding policy has an effect.Policy lag = inside lag + outside lagInside lag = recognition lag + decision lag + action lag 2023/7/277Policy lagsInside lagRecognition lag +/- Decision lag+Action lag+Outside lag+ 2023/7/278Monetary vs. fiscal policy lagsPolicyMonetaryFiscalInside lagRecognition ----DecisionShortLongActionShortLongOutside lagLongShort 2023/7/279Policy LagsA once-and-for-all 1% increase in money supply in Q0Monetary policy outside lag 2023/7/2710Monetary vs. fiscal policy lagsMonetary policy is frequently employed to offset small disturbances due to its short inside lag.Fiscal policy is often used when there is a big disturbance. 2023/7/2711Automatic stabilizersIncome tax and unemployment compensation.Automatic stabilizers’ inside lag is zero.However, automatic stabilizers should not be carried too far. 2023/7/2712Homework (1) $1 billion increase in G will increases GDP by $1 billion this period and $2 billion next period. Now GDP falls by $3 billion from potential level permanently (1) The government wants to always keep potential GDP, what would the government do? (2) What is your suggestion for the government? 2023/7/2713OutlinePolicy LagsUncertaintyRules, Discretion and Dynamic Inconsistency 2023/7/2714Uncertainties of disturbanceWhen?Size?Type? demand or supply ?permanent or temporary ? 2023/7/2715Uncertainty of disturbanceType (