宏观经济学chap09.ppt

* Note the economy’s “self-correction” mechanism: When in a recession, the economy left to its own devices “fixes” itself: the gradual adjustment of prices helps the economy recover from the shock and return to full employment. Of course, before the economy has finished self-correcting, a period of low output and high unemployment is endured. * * Oil is required to heat the factories in which goods are produced, and to fuel the trucks that transport the goods from the factories to the warehouses to Walmart stores. A sharp increase in the price of oil, therefore, has a substantial effect on production costs. * And, as output falls from Ybar to Y2 in the graph, we would expect to see unemployment increase above the natural rate of unemployment. (Recall from chapter 2: Okun’s law says that output and unemployment are inversely related.) Note the phrase “in absence of further price shocks.” As we will see shortly, just as the economy was recovering from the first big oil shock, a second one came along. * This slide first summarizes the model’s predictions from the preceding slide, and then presents data (from the text, p.274) that supports the model’s predictions. * Data source: See p.274 of the textbook. This second shock was associated with the revolution in Iran. The Shah, who maintained cordial relations with the West, was deposed. The new leader, Ayatollah Khomeini, was considerably less friendly toward the West. (He even forbade his citizens from listening to Western music.) * A few slides back, we analyzed the effects of an adverse supply shock. It might be worth noting that the predicted effects of a favorable supply shock are just the opposite: in the short run, the price level (or inflation rate) falls, output rises, and unemployment falls. Looking at the graph: at first glance, it may seem that the fall in oil prices doesn’t occur until 1986. But remind students to look at the left-hand scale, on which 0 is in the middle