五讲奥肯定律和菲利普斯曲线省公共课一等奖全国赛课获奖课件.pptx

第第 五五 讲讲 奥必定理和菲力浦斯曲线奥必定理和菲力浦斯曲线第1页Price Determination and the Production FunctionWe assume that labor is the only input,thenOutput:Y=ANN=EmploymentA=Labor Productivity1.Okuns Law:FromOutput Growth to UnemploymentRecall:Y=NY=N=L(1-u)Assume A=1,Then we get第2页 The actual relation between output growth and the The actual relation between output growth and the change in the unemployment rate is known as change in the unemployment rate is known as Okuns Okuns law.law.n n F From the above relation,we can get one to one rom the above relation,we can get one to one relationship between Y and urelationship between Y and un Change it slightly,we can obtain what we need-a relation between output growth and the change of unemployment.第3页Changes in the Changes in the Unemployment Rate Unemployment Rate Versus Output Versus Output Growth in the United Growth in the United States,1970-States,1970-Using thirty years of data,the line that best fits the Using thirty years of data,the line that best fits the data is given by:data is given by:第4页According to the equation above,According to the equation above,To maintain the unemployment rate constant,output To maintain the unemployment rate constant,output growth growth must be 3%per yearmust be 3%per year.This growth rate of.This growth rate of output is called the output is called the normal growth rate.normal growth rate.第5页According to the equation,output growth 1%According to the equation,output growth 1%above normal leads only to a 0.4%reduction above normal leads only to a 0.4%reduction in unemployment,for two reasons:in unemployment,for two reasons:1.1.“Fixed production units”(e.g.the accounting“Fixed production units”(e.g.the accounting department of a firm)+Labor hoardingdepartment of a firm)+Labor hoarding2.2.Increase in the labor forceIncrease in the labor force第6页Using letters rather than numbers:Using letters rather than numbers:Output growth above normal leads to a Output growth above normal leads to a decrease in the unemployment rate.This is decrease in the unemployment rate.This is Okuns law:Okuns law:第7页PC0u In 1958,A.W.Phillips drew a diagram In 1958,A.W.Phillips drew a diagram plotting the rate of inflation against the plotting the rate of inflation against the rate of unemployment in the United rate of unemployment in the United Kingdom for each year from 1861 to Kingdom for each year from 1861 to 1957.He found a clear evidence of a 1957.He found a clear evidence of a negative relation between inflation and negative relation between inflation and unemployment:When unemployment unemployment:When unemployment was low,inflation was high,and when was low,inflation was high,and when unemployment was high,inflation was unemployment was high,inflation was low,often even negative.low,often even negative.Two years later,Paul Samuelson and Two years later,Paul Samuelson and Robert Solow replicated Phillips Robert Solow replicated Phillips exercise for the United States,there exercise for the United States,there appeared to be a negative relation appeared to be a negative relation between inflation and unemployment in between inflation and unemployment in the United States also.the United States also.Samuelson and Solow baptized this relation the Phillips Curve.Phillips Curve.2.The Phillips Curve:From Unemployment to Inflation第8页 The Phillps curve rapidly became central to macroeconomic The Phillps curve rapidly became central to macroeconomic thinking and policy.It appeared to imply that countries could thinking and policy.It appeared to imply that countries could choose between different combinations of unemployment and choose between different combinations of unemployment and inflation.They could achieve low unemployment if they were inflation.They could achieve low unemployment if they were willing to tolerate higher inflation.Or they could achieve price willing to tolerate higher inflation.Or they could achieve price stability if they were willing to tolerate higher unemployment.stability if they were willing to tolerate higher unemployment.Much of the discussion about macroeconomic policy became a Much of the discussion about macroeconomic policy became a discussion about which point to choose on the Phillips curve.discussion about which point to choose on the Phillips curve.In the 1970s,however,the relation broke down.There was both In the 1970s,however,the relation broke down.There was both high inflation and high unemployment in both the United States high inflation and high unemployment in both the United States and most OECD countries.and most OECD countries.A relation reappeared,but it was now a relation between the A relation reappeared,but it was now a relation between the unemployment rate and theunemployment rate and the changechange in the inflation rate.in the inflation rate.第9页Inflation Versus Unemployment in the United States,Inflation Versus Unemployment in the United States,1900-19601900-1960第10页Inflation,ExpectedInflation,and Unemployment This relation can be rewritten to establish a relation This relation can be rewritten to establish a relation between between inflationinflation,expected inflationexpected inflation,and the,and the unemployment rateunemployment rate.2-1 First,the function First,the function F F,assumes the form:,assumes the form:Then,replace this function in the one above:Then,replace this function in the one above:Recall the AS relation:第11页第12页Rearranging gives:As long as inflation,expected inflation and the markup are not too large,a approximation to this equation is given by:第13页The Phillips CurveIf we set If we set thenthen:2-2 The The wage-price spiralwage-price spiral:Given PGiven Pe et t=P=Pt-1t-1:Low unemployment at time t Low unemployment at time t W Wt t WWt t P Pt t P Pe et+1t+1 W Wt+1t+1 P Pt+1t+1 P Pe et+1t+1 WWt+2t+2 P Pt+2t+2 ,and so onThis is the original This is the original Phillips curvePhillips curve第14页MutationsThe negative relation between unemployment The negative relation between unemployment and inflation held throughout the 1960s,but it and inflation held throughout the 1960s,but it vanished after that,for two reasons:vanished after that,for two reasons:An increase in the price of oil,but more importantly,An increase in the price of oil,but more importantly,A change in the way wage setters formed A change in the way wage setters formed expectations due to a change in the behavior of the expectations due to a change in the behavior of the rate of inflation.rate of inflation.The inflation rate became consistently positive,andThe inflation rate became consistently positive,and Inflation became more persistent.Inflation became more persistent.第15页MutationsInflation versus Inflation versus UnemploymentUnemploymentin the United States,in the United States,1948-19691948-1969第16页MutationsInflation versus Inflation versus UnemploymentUnemploymentin the United States,in the United States,1970-1970-第17页MutationsU.S.Inflation,1900-U.S.Inflation,1900-第18页The Formation of Expectations Suppose expectations of inflation are formed Suppose expectations of inflation are formed according toaccording to第19页The Formation of Expectations In the equation above,when In the equation above,when equals zero,the relation equals zero,the relation between the inflation rate and the unemployment rate between the inflation rate and the unemployment rate is:is:When When is positive,the inflation rate depends on both is positive,the inflation rate depends on both the unemployment rate and last years inflation rate:the unemployment rate and last years inflation rate:When When is positive,the inflation rate depends on both is positive,the inflation rate depends on both the unemployment rate and last years inflation rate:the unemployment rate and last years inflation rate:第20页The Formation of ExpectationsWhen When =1,the unemployment rate affects not =1,the unemployment rate affects not the inflation rate,but the change in the the inflation rate,but the change in the expected inflation rate.expected inflation rate.Since 1970,a clear negative relation emerged Since 1970,a clear negative relation emerged between the between the unemployment rateunemployment rate and the and the change in the inflation ratechange in the inflation rate.第21页The Formation of Expectations The line that best fits the scatter of points for the period 1970-is:The line that best fits the scatter of points for the period 1970-is:Change in Inflation Change in Inflation versus Unemployment versus Unemployment in the United States,in the United States,1970-1970-第22页The Formation of Expectations The original Phillips curve is:The original Phillips curve is:The The modified Phillips curvemodified Phillips curve,also called the,also called the expectations-augmented Phillips curveexpectations-augmented Phillips curve,or the,or the accelerationist Phillips curveaccelerationist Phillips curve,is:,is:第23页Back to the NaturalRate of UnemploymentFriedman and Phelps:the unemployment rate Friedman and Phelps:the unemployment rate can not be sustained below a certain level can not be sustained below a certain level“natural rate of unemployment.”“natural rate of unemployment.”The natural rate of unemployment is the The natural rate of unemployment is the unemployment rate such that unemployment rate such that the actual the actual inflation rate is equal to the expected inflation inflation rate is equal to the expected inflation raterate.then,then,第24页Back to the NaturalRate of Unemploymentthen,then,GivenGiventhen,then,Finally,assuming that Finally,assuming that e et t is well approximated by is well approximated by t-1t-1,then:,then:第25页Back to the NaturalRate of UnemploymentThe The non-accelerating-inflation rate of non-accelerating-inflation rate of unemployment,(or NAIRU),unemployment,(or NAIRU),is the rate of is the rate of unemployment required to unemployment required to keep the inflation rate keep the inflation rate constantconstant.第26页A Summary andMany Warnings8-3Variations in the Natural Rate of Unemployment Variations in the Natural Rate of Unemployment Across CountriesAcross Countries第27页Variations in the Natural Rateof Unemployment over TimeNote:Note:and z may not be constant over time.and z may not be constant over time.A high unemployment rate does not A high unemployment rate does not necessarily reflect a high natural rate of necessarily reflect a high natural rate of unemployment.unemployment.第28页Variations in the Natural Rate of Unemployment Across CountriesChange in Inflation Versus Change in Inflation Versus UnemploymentUnemploymentEuropean Union,1961-European Union,1961-第29页High Inflation and thePhillips Curve RelationThe relation between unemployment and The relation between unemployment and inflation is likely to change with the inflation is likely to change with the level and level and the persistence of inflationthe persistence of inflation.When inflation is high,it is also more variable.When inflation is high,it is also more variable.The form of wage agreements also changes The form of wage agreements also changes with the level of inflation(with the level of inflation(Wage indexation Wage indexation mechanism)mechanism)第30页High Inflation and thePhillips Curve Relation Let Let denote the proportion of labor contracts that is denote the proportion of labor contracts that is indexed,and(1indexed,and(1 )the proportion that is not indexed.)the proportion that is not indexed.Then,becomes:Then,becomes:The proportion of contracts that is indexed responds to The proportion of contracts that is indexed responds to t t,while the proportion that is not responds to,while the proportion that is not responds to e et t.When When =0,all wages are set on the basis of expected =0,all wages are set on the basis of expected inflation(equal to last years inflation),then:inflation(equal to last years inflation),then:第31页High Inflation and thePhillips Curve Relation When When is positive,is positive,第32页Deflation and thePhillips Curve RelationGiven the very high rate of unemployment Given the very high rate of unemployment during the Great Depression,we would have during the Great Depression,we would have expected a large rate of deflation,but deflation expected a large rate of deflation,but deflation was limited.was limited.The reason for this may be that the Phillips The reason for this may be that the Phillips curve relation may disappear or at least curve relation may disappear or at least become weaker when the economy is close to become weaker when the economy is close to zero inflation.zero inflation.第33页ProblemsChapter 8:Problems 2,3,5Chapter 8:Problems 2,3,5第34页The Aggregate Demand Relation:From Nominal The Aggregate Demand Relation:From Nominal Money Growth and Inflation to Output GrowthMoney Growth and Inflation to Output GrowthIn terms of the growth rates of output,money,In terms of the growth rates of output,money,and the price level:and the price level:According to the aggregate demand relation:According to the aggregate demand relation:Given inflation,expansionary monetary policy Given inflation,expansionary monetary policy leads to high output growth.leads to high output growth.第35页The Medium Run第36页SummarizingIn the medium run:ut=ut-1 and t=t-1 第37页Summarizing第38页Summarizing第39页The Medium RunInflation and Inflation and UnemploymentUnemploymentin the Medium Runin the Medium Run第40页Disinflation To achieve lower inflation,the rate of nominal money To achieve lower inflation,the rate of nominal money growth must be reduced.Here is what happens:growth must be reduced.Here is what happens:9-3 In the aggregate demand relation,In the aggregate demand relation,Then,from Okuns law,Then,from Okuns law,Finally,according to the Phillips curve relation:Finally,according to the Phillips curve relation:But over time,But over time,According to the Phillips curve relation:According to the Phillips curve relation:In the aggregate demand relation,In the aggregate demand relation,Then,from Okuns law,Then,from Okuns law,After a decrease in nominal money growth,unemployment After a decrease in nominal money growth,unemployment first increases,but eventually,it starts decreasing.first increases,but eventually,it starts decreasing.第41页How Much Unemployment?and for How Long?Disinflation=Higher unemploymentDisinflation=Higher unemployment A A point-year of excess unemploymentpoint-year of excess unemployment is a is a difference between the actual and the natural difference between the actual and the natural unemployment rate of one percentage point for one unemployment rate of one percentage point for one year.year.For example,assuming that For example,assuming that =1,=1,reducing inflation by reducing inflation by 10%over 5 years requires 5 years of unemployment 10%over 5 years requires 5 years of unemployment at 2%above the natural rate.at 2%above the natural rate.第42页How Much Unemployment?and for How Long?The The sacrifice ratiosacrifice ratio is the number of point-is the number of