ch15Macroeconomic Issues and Policy(宏观经济学Karl Case, Ray Fair)概要1.ppt

MacroeconomicIssues and Policy Stabilization Policy Stabilization policy describes both monetary and fiscal policy, the goals of which are to smooth out fluctuations in output and employment and to keep prices as stable as possible. Time Lags RegardingMonetary and Fiscal Policy Time lags are delays in the economy’s response to stabilization policies. Two Possible Time Paths for GDP Path A is less stable—it varies more over time—than path B. Other things being equal, society prefers path B to path A. Stabilization: “The Fool in the Shower” Attempts to stabilize the economy can prove destabilizing because of time lags. Milton Friedman likened these attempts to a “fool in the shower.” The government is constantly stimulating or contracting the economy at the wrong time. Stabilization: “The Fool in the Shower” An expansionary policy that should have begun to take effect at point A does not actually begin to have an impact until point D, when the economy is already on an upswing. Stabilization: “The Fool in the Shower” Hence, the policy pushes the economy to points F’ and G’ (instead of F and G). Income varies more widely than it would have if no policy had been implemented. Recognition Lags The recognition lag refers to the time it takes for policy makers to recognize the existence of a boom or a slump. Implementation Lags The implementation lag is the time it takes to put the desired policy into effect once economists and policy makers recognize that the economy is in a boom or a slump. The implementation lag for monetary policy is generally much shorter than for fiscal policy. Response Lags The response lag is the time it takes for the economy to adjust to the new conditions after a new policy is implemented; the lag that occurs because of the operation of the economy itself. The delay in the multiplier of government spending occurs because neither individuals nor firms revise their spending plans instantaneously. Monetary Policy Targeting the Interest Rate