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UNIT 1 Macro - Luigi Pascali

Luigi Pascali
Assignatura

Macroeconomía

296 Documents
Els estudiants han compartit 296 documents en aquest curs
Any acadèmic: 2018/2019
Pujat per:
CC
Carina Casadesús
Universitat Pompeu Fabra
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INTRODUCTION TO MACROECONOMICS

LECTURE 1

A TOUR OF THE WORLD

1) BASIC CONCEPTS

  • Microeconomics: studies how households and companies take decisions and how they relate in the economy. The State only has a say on taxes.
  • Macroeconomics: studies the bigger forces that affect the economy as a whole, and how it affects households, companies and markets. The State has a bigger role with the monetary (inflation control and interest rate) and fiscal (taxes and government spending) policies
  • There are 3 variables:
    1. Output growth rate (GDP): the level of production of the economy as a whole – and it’s rate of growth
  1. Unemployment rate : the proportion of workers in the economy who are not employed and are looking for a job
  2. Inflation rate : the rate at which the average price of the good in the economy is increasing over time

2) UNITED STATES

  • Economically speaking, the best years were the 1990s, but the financial crisis has halted this expansion, although now it’s recovering
  • Financial crisis: due to
    1. The decline in house prices
    2. Increase in oil prices

Carina Casadesús Dret + ADE/ECO

  1. Default on mortgages (inclumpimiento de las hipotecas): mortgages had been sold in packages by banks and these new securities had been sold to other banks These securities were difficult to price. Not knowing the quality of assets of the banks, few were willing to lend to banks
  2. When banks were in trouble, credit to privates collapsed and the financial markets collapsed

CREDIT TO THE PRIVATE NON-FINANCIAL SECTOR

STOCK PRICES

  • The crisis propagated through the rest of the world, through 2 channels: a) Trade b) Financial

  • Low interest rates and zero lower bound When the crisis started, the FED (Sistema de Reserva Federal) tried to limit the decrease in spending by decreasing the interest rate it controls, the federal funds rate

3) THE EUROPEAN UNION

  • As in the EEUU, the 1990s performance was better than the actual:
    • Average annual output growth reflected a significant slowdown in all of the largest European economies since 2008, and a recession in 2009.
    • Low output growth was accompanied by persistently high unemployment
    • Good: inflation. Average annual inflation was 2% in the EU and 2% in the euro area

  • 3 issues that dominate the agenda of European macroeconomists: a) Growth of income per person b) High unemployment: its 2% higher that in the USA, the contrary as before 1984 . Probably because in USA is very easy and cheap to hire them c) Common currency: there are still a lot of questions about the Euro
  • How can European Unemployment be reduced? There is still disagreement
    • Politicians: blame macroeconomic policy
    • Economists: blame the labour market institutions (rigidities)

  • What will the Euro do for Europe?
    • Supporters: point its symbolic importance and the benefit of the common market
    • Non-supporters: the symbolism of the euro may come with some economic costs, like the same interest rate across the euro countries

4) BRIC COUNTRIES

  • Brazil, China, India and Russia (BRICs) have grown rapidly over the last decade and are now the largest economies outside of the group of advanced countries
  • Where does the growth come from?
    • High accumulation of capital
    • Very fast technological progress
T’ha resultat útil aquest document?

UNIT 1 Macro - Luigi Pascali

Assignatura: Macroeconomía

296 Documents
Els estudiants han compartit 296 documents en aquest curs

Universitat: Universitat Pompeu Fabra

T’ha resultat útil aquest document?
!
1!
INTRODUCTION TO MACROECONOMICS
LECTURE 1
A TOUR OF THE WORLD
!
1) BASIC CONCEPTS
- Microeconomics:!studies!how!households!and!companies!take!decisions!and!how!
they!relate!in!the!economy.!The!State!only!has!a!say!on!taxes.!
- Macroeconomics:!studies!the!bigger7forces!that!affect!the!economy!as!a!whole,!
and!how!it!affects!households,!companies!and!markets.!The!State!has!a!bigger!role!
with!the!monetary!(inflation(control(and(interest(rate)!and!fiscal7(taxes(and(
government(spending)!policies!
- There!are!37variables:!7
1. Output7growth7rate7(GDP):7the!level!of!production!of!the!economy!as!a!whole!
–!and!it’s!rate!of!growth7
7
2. Unemployment7rate:7the!proportion!of!workers!in!the!economy!who!are!not!
employed!and!are!looking!for!a!job7
3. Inflation7rate:7the!rate!at!which!the!average!price!of!the!good!in!the!economy!
is!increasing!over!time7
7
2) UNITED STATES
- Economically!speaking,!the!best!years!were!the!1990s,!but!the!financial7crisis!has!
halted!this!expansion,!although!now!it’s!recovering7
- Financial7crisis:7due!to7
1. The!decline7in7house7prices!
2. Increase7in7oil7prices
Carina7Casadesús7
Dret7+7ADE/ECO7

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