五讲奥肯定律和菲利普斯曲线.pptx

Click to edit Master title style and for two-line headings,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,2003,Prentice Hall Business PublishingMacroeconomics,3/e Olivier Blanchard,第 五 讲 奥肯定理和菲力浦斯曲线,Price Determination and the Production Function,We assume that labor is the only input,then,Output:,Y=AN,N,=Employment,A,=Labor Productivity,1.Okuns Law:FromOutput Growth to Unemployment,Recall:,Y=N,Y=N=L(1-u),Assume,A=1,Then we get,The actual relation between output growth and the change in the unemployment rate is known as,Okuns law.,F,rom the above relation,we can get one to one relationship between Y and u,C,hange it slightly,we can obtain what we need-a relation between output growth and the change of unemployment.,Changes in the Unemployment Rate Versus Output Growth in the United States,1970-2023,Using thirty years of data,the line that best fits the data is given by:,According to the equation above,To maintain the unemployment rate constant,output growth,must be 3%per year,.This growth rate of output is called the,normal growth rate.,According to the equation,output growth 1%above normal leads only to a 0.4%reduction in unemployment,for two reasons:,“Fixed production units”(e.g.the accounting department of a firm)+Labor hoarding,Increase in the labor force,Using letters rather than numbers:,Output growth above normal leads to a decrease in the unemployment rate.This is Okuns law:,PC,0,u,In 1958,A.W.Phillips drew a diagram plotting the rate of inflation against the rate of unemployment in the United Kingdom for each year from 1861 to 1957.He found a clear evidence of a negative relation between inflation and unemployment:When unemployment was low,inflation was high,and when unemployment was high,inflation was low,often even negativeTwo years later,Paul Samuelson and Robert Solow replicated Phillips exercise for the United States,there appeared to be a negative relation between inflation and unemployment in the United States also.,Samuelson and Solow baptized this relation the,Phillips Curve.,2.,The Phillips Curve,:,From Unemployment to Inflation,The Phillps curve rapidly became central to macroeconomic thinking and policy.It appeared to imply that countries could choose between different combinations of unemployment and inflation.They could achieve low unemployment if they were willing to tolerate higher inflation.Or they could achieve price stability if they were willing to tolerate higher unemployment.Much of the discussion about macroeconomic policy became a discussion about which point to choose on the Phillips curve.,In the 1970s,however,the relation broke down.There was both high inflation and high unemployment in both the United States and most OECD countries.,A relation reappeared,but it was now a relation between the unemployment rate and the,change,in the inflation rate.,Inflation Versus Unemployment in the United States,1900-1960,Inflation,ExpectedInflation,and Unemployment,This relation can be rewritten to establish a relation between,inflation,expected inflation,and the,unemployment rate,.,2-1,First,the function,F,assumes the form:,Then,replace this function in the one above:,R,ecall the AS relation:,R,earranging gives:,A,s long as inflation,expected inflation and the markup are not too large,a approximation to this equation is given by:,The Phillips Curve,If we set,then,:,2-2,The,wage-price spiral,:,Given P,e,t,=P,t-1,:,Low unemployment at time t,W,t,W,t,P,t,P,e,t+1,W,t+1,P,t+1,P,e,t+1,W,t+2,P,t+2,and so on,This is the original,Phillips curve,Mutations,The negative relation between unemployment and inflation held throughout the 1960s,but it vanished after that,for two reasons:,An increase in the price of oil,but more importantly,A change in the way wage setters formed expectations due to a change in the behavior of the rate of inflation.,The inflation rate became consistently positive,and,Inflation became more persistent.,Mutations,Inflation versus Unemploymentin the United States,1948-1969,Mutations,Inflation versus Unemploymentin the United States,1970-2023,Mutations,U.S.Inflation,1900-2023,The Formation of Expectations,Suppose expectations of inflation are formed according to,The Formation of Expectations,In the equation above,when,equals zero,the relation between the inflation rate and the unemployment rate is:,When,is positive,the inflation rate depends on both the unemployment rate and last years inflation rate:,When,is positive,the inflation rate depends on both the unemployment rate and last years inflation rate:,The Formation of Expectations,When,=1,the unemployment rate affects not the inflation rate,but the change in the expected inflation rate.,Since 1970,a clear negative relation emerged between the,unemployment rate,and the,change in the inflation rate,.,The Formation of Expectations,The line that best fits the scatter of points for the period 1970-2023 is:,Change in Inflation versus Unemployment in the United States,1970-2023,The Formation of Expectations,The original Phillips curve is:,The,modified Phillips curve,also called the,expectations-augmented Phillips curve,or the,accelerationist Phillips curve,is:,Back to the NaturalRate of Unemployment,Friedman and Phelps:the unemployment rate can not be sustained below a certain level,“natural rate of unemployment.”,The natural rate of unemployment is the unemployment rate such that,the actual inflation rate is equal to the expected inflation rate,.,then,Back to the NaturalRate of Unemployment,then,Given,then,Finally,assuming that,e,t,is well approximated by,t-1,then:,Back to the NaturalRate of Unemployment,The,non-accelerating-inflation rate of unemployment,(or NAIRU),is the rate of unemployment required to,keep the inflation rate constant,.,A Summary andMany Warnings,8-3,Variations in the Natural Rate of Unemployment Across Countries,Variations in the Natural Rateof Unemployment over Time,Note:,and z may not be constant over time.,A high unemployment rate does not necessarily reflect a high natural rate of unemployment.,Variations in the Natural Rate of Unemployment Across Countries,Change in Inflation Versus UnemploymentEuropean Union,1961-2023,High Inflation and thePhillips Curve Relation,The relation between unemployment and inflation is likely to change with thelevel and the persistence of inflation,.,When inflation is high,it is also more variable.,The form of wage agreements also changes with the level of inflation(,Wage indexation mechanism),High Inflation and thePhillips Curve Relation,Let,denote the proportion of labor contracts that is indexed,and(1)the proportion that is not indexed.Then,becomes:,The proportion of contracts that is indexed responds to,t,while the proportion that is not responds to,e,t,.,When =0,all wages are set on the basis of expected inflation(equal to last years inflation),then:,High Inflation and thePhillips Curve Relation,When,is positive,Deflation and thePhillips Curve Relation,Given the very high rate of unemployment during the Great Depression,we would have expected a large rate of deflation,but deflation was limited.,The reason for this may be that the Phillips curve relation may disappear or at least become weaker when the economy is close to zero inflation.,Problems,Chapter 8:Problems 2,3,5,The Aggregate Demand Relation:From Nominal Money Growth and Inflation to Output Growth,In terms of the growth rates of output,money,and the price level:,According to the aggregate demand relation:,Given inflation,expansionary monetary policy leads to high output growth.,The Medium Run,Summarizing,In the medium run:,u,t,=u,t-1,and,t,=,t-1,Summarizing,Summarizing,The Medium Run,Inflation and Unemploymentin the Medium Run,Disinflation,To achieve lower inflation,the rate of nominal money growth must be reduced.Here is what happens:,9-3,In the aggregate demand relation,Then,from Okuns law,Finally,according to the Phillips curve relation:,But over time,According to the Phillips curve relation:,In the aggregate demand relation,Then,from Okuns law,After a decrease in nominal money growth,unemployment first increases,but eventually,it starts decreasing.,How Much Unemployment?and for How Long?,Disinflation=Higher unemployment,A,point-year of excess unemployment,is a difference between the actual and the natural unemployment rate of one percentage point for one year.,For example,assuming that,=1,reducing inflation by 10%over 5 years requires 5 years of unemployment at 2%above the natural rate.,How Much Unemployment?and for How Long?,The,sacrifice ratio,is the number of point-years of excess unemployment needed to achieve a decrease in inflation of 1%.,For example,if,=1,a,sacrifice ratio of 1.32 means that a 10%disinflation requires 13.2 point-years of excess unemployment.,Working Out the Pathof Nominal Money Growth,This table shows the path of nominal money growth needed to achieve 10%disinflation over five years.,Table 9-1,Engineering Disinflation,0,1,2,3,4,5,6,7,8,Inflation(%),14,12,10,8,6,4,4,44,Unemploymentrate(%),6,8,8,8,8,8,6,6,6,Output growth(%),3,2,3,3,3,3,8,3,3,Nominal money growth(%),17,10,13,11,9,7,12,7,7,Working Out the Pathof Nominal Money Growth,This figure shows the path of unemployment and inflation implied by the disinflation path in Table 9-1.,A Disinflation Path,Expectations,Credibility,and Nominal Contracts,9-4,This section examines how changes in expectation formation might affect the unemployment cost of disinflation.,Two separate groups of macroeconomists challenge the traditional notion that policy can change the,timing,but not the number of point-years of excess unemployment.,Expectations and Credibility:The Lucas Critique,The,Lucas critique,Thomas Sargent argued that in order to achieve disinflation,any increase in unemployment would have to be only small.,The essential ingredient of successful disinflation,he argued,was,credibility,of monetary,Normal Rigidities and Contracts,nominal rigidities,(Fisher and Taylor),staggering of wage decisions,The way to decrease the unemployment cost of disinflation is to give wage setters,time,to take the change in policy into account.,Slow but credible disinflation might have a lower cost.The central bank should go for slow disinflation.,Normal Rigidities and Contracts,Disinflation Without Unemploymentin the Taylor Model,The U.S.Disinflation,1979-1985,9-5,Table 9-2,Inflation and Unemployment,1979-1985,Percent,1979,1980,1981,1982,1983,1984,1985,GDP growth,2.5,0.5,1.8,2.2,3.9,6.2,3.2,Unemployment rate,5.8,7.1,7.6,9.7,9.6,7.5,7.2,CPI inflation,13.3,12.5,8.9,3.8,3.8,3.9,3.8,Cumulative unemployment,1.0,2.6,6.3,9.9,11.4,12.6,Cumulative disinflation,0.8,4.4,9.5,9.5,9.4,9.5,Sacrifice ratio,1.25,0.59,0.66,1.04,1.21,1.32,The U.S.Disinflation,1979-1985,The U.S.disinflation of the early 1980s was associated with a substantial increase in unemployment.The Phillips curve relation proved more robust than many economists anticipated.,The U.S.Disinflation,1979-1985,The Federal Funds Rateand Inflation,1979-1984,The U.S.Disinflation,1979-1985,Laurence Ball,who examined 65 disinflation episodes concluded that:,Disinflations typically lead to a period of higher unemployment.,Faster disinflations are associated with smaller sacrifice ratios.,Sacrifice ratios are smaller in countries that have shorter wage contracts.,