人民大学：《宏观经济学》（英文版）Lecture 11 Intermediate Macroeconomics

Intermediate Macroeconomics Lecture 11 1

1 Intermediate Macroeconomics Lecture 11

The Macroeconomic Policy Debate o William McChesney Martin The fed s job is to take away the punch bowl just as the party gets going 联储的工作是在宴会进行时拿走盛满酒的酒杯 The economy is inherently unstable

2 The Macroeconomic Policy Debate ⚫ William McChesney Martin The fed.’s job is to take away the punch bowl just as the party gets going 联储的工作是在宴会进行时拿走盛满酒的酒杯。 The economy is inherently unstable

The Macroeconomic Policy Debate ● Milton friedman 我们需要的不是把经济之车的方向盘一直调整到 不可预期的无规则之路上的高超货币司 机 The economy is naturally stable 3

3 The Macroeconomic Policy Debate ⚫ Milton Friedman 我们需要的不是把经济之车的方向盘一直调整到 不可预期的无规则之路上的高超货币司 机．．． The economy is naturally stable…

The Macroeconomic Policy Debate Active or passive? 2. Free to use discretion or fixed policy rule?

4 The Macroeconomic Policy Debate 1. Active or passive? 2. Free to use discretion or fixed policy rule?

Should policy Be Active or Passive? ● Active In the absence of an active government role in the economy, events like the Great Depression could occur regularly fight shocks by fiscal/monetary policy 5

5 Should Policy Be Active or Passive? ⚫ Active In the absence of an active government role in the economy, events like the Great Depression could occur regularly. → fight shocks by fiscal/monetary policy

Should policy Be Active or Passive? ● Passive o Lags in implementation effects of policies Inside lag outside lag Automatic stabilizers (income tax; unemployment insurance, Martin Weitzman: profit sharing) 6

6 Should Policy Be Active or Passive? ⚫ Passive ① Lags in implementation & effects of policies --- inside lag --- outside lag Automatic stabilizers (income tax; unemployment insurance; Martin Weitzman: profit sharing)

Should policy Be Active or Passive? Passive Economic forecasting is difficult index of leading indicators economic models 7

7 Should Policy Be Active or Passive? ⚫ Passive Economic forecasting is difficult: --- index of leading indicators --- economic models

Should Policy Be Active or Passive? eg.制造业工人平均生产周数 平均每周州失业保障首次申请 发放的新建筑许可证 敏感原料的价格变动 股票价格指数 根据通货膨胀调整的货币供给 消费者预期指数 8

8 Should Policy Be Active or Passive? e.g. 制造业工人平均生产周数 平均每周州失业保障首次申请 发放的新建筑许可证 敏感原料的价格变动 股票价格指数 根据通货膨胀调整的货币供给 消费者预期指数

Should policy Be Active or Passive? Ignorance, expectations, the "Lucas Critique Robert lucas Expectations play a crucial role in the economy >Expectations depend on policies > Estimating the effect of a policy change requires knowing how people's expectations will respond > Traditional methods of policy evaluation do not adequately take into account this impact of policy on expectations 9

9 Should Policy Be Active or Passive? ⚫ Ignorance, expectations, & the “Lucas Critique” Robert Lucas Expectations play a crucial role in the economy → Expectations depend on policies → Estimating the effect of a policy change requires knowing how people’s expectations will respond → Traditional methods of policy evaluation do not adequately take into account this impact of policy on expectations

The historical record e Still cannot settle the debate, because it is not easy to identify the sources of economic fluctuations. Multiple interpretations are easonable o We did better? Or the data did ls the stabilization of the economy a figment of the data?(Christina Romer) 10

10 The Historical Record ⚫ Still cannot settle the debate, because it is not easy to identify the sources of economic fluctuations. Multiple interpretations are reasonable. ⚫ We did better? Or the data did? Is the stabilization of the economy a figment of the data? (Christina Romer)