CHAP15Stabilization Policy培训资料.pptVIP

* CHAPTER 15 Stabilization Policy The Jury’s out… Looking at recent history does not clearly answer Question 1: It’s hard to identify shocks in the data. It’s hard to tell how outcomes would have been different had actual policies not been used. * CHAPTER 15 Stabilization Policy Question 2: Should policy be conducted by rule or discretion? ? * CHAPTER 15 Stabilization Policy Rules and discretion: Basic concepts Policy conducted by rule: Policymakers announce in advance how policy will respond in various situations, and commit themselves to following through. Policy conducted by discretion:As events occur and circumstances change, policymakers use their judgment and apply whatever policies seem appropriate at the time. * CHAPTER 15 Stabilization Policy Arguments for rules 1. Distrust of policymakers and the political process misinformed politicians politicians’ interests sometimes not the same as the interests of society: political business cycle? * CHAPTER 15 Stabilization Policy Political Business Cycle? * CHAPTER 15 Stabilization Policy Arguments for rules 2. The time inconsistency of discretionary policy def: A scenario in which policymakers have an incentive to renege on a previously announced policy once others have acted on that announcement. Destroys policymakers’ credibility, thereby reducing effectiveness of their policies. * CHAPTER 15 Stabilization Policy Examples of time inconsistency 1. To encourage investment, govt announces it will not tax income from capital. But once the factories are built, govt reneges in order to raise more tax revenue. * CHAPTER 15 Stabilization Policy Examples of time inconsistency 2. To reduce expected inflation, the central bank announces it will tighten monetary policy. But faced with high unemployment, the central bank may be tempted to cut interest rates. * CHAPTER 15 Stabilization Policy Examples of time inconsistency 3. Aid is given to poor countries contingent on fiscal