五讲奥肯定律和菲利普斯曲线市公开课金奖市赛课一等奖课件

1、 第 五 讲 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 growt

2、h and the change in the unemployment rate is known as Okuns law. From the above relation, we can get one to one relationship between Y and u 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 Unemployment Rate Versus Outpu

3、t Growth in the United States, 1970-Using thirty years of data, the line that best fits the data is given by:第4页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.第5页According to t

4、he 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 hoardingIncrease in the labor force第6页Using letters rather than numbers:Output growth above normal leads to a decrease

5、 in the unemployment rate. This is Okuns law:第7页PC0uIn 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 un

6、employment was low, inflation was high, and when unemployment was high, inflation was low, often even negative.Two 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 Unite

7、d States also. Samuelson and Solow baptized this relation the Phillips Curve.2. The Phillips Curve: From Unemployment to Inflation第8页The Phillps curve rapidly became central to macroeconomic thinking and policy. It appeared to imply that countries could choose between different combinations of unemp

8、loyment 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

9、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. 第9页Inflatio

10、n Versus Unemployment in the United States, 1900-1960第10页Inflation, ExpectedInflation, and UnemploymentThis relation can be rewritten to establish a relation between inflation, expected inflation, and the unemployment rate.2-1First, the function F, assumes the form:Then, replace this function in the

11、 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 then:2-2The wage-price spiral:Given Pet =Pt-1:Low unemployment at time t Wt Wt Pt Pet+1

12、Wt+1 Pt+1 Pet+1 Wt+2 Pt+2 , and so onThis is the original Phillips curve第14页MutationsThe 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

13、formed expectations due to a change in the behavior of the rate of inflation.The inflation rate became consistently positive, andInflation became more persistent.第15页MutationsInflation versus Unemploymentin the United States, 1948-1969第16页MutationsInflation versus Unemploymentin the United States, 1

14、970-第17页MutationsU.S. Inflation, 1900-第18页The Formation of ExpectationsSuppose expectations of inflation are formed according to第19页The Formation of ExpectationsIn the equation above, when equals zero, the relation between the inflation rate and the unemployment rate is:When is positive, the inflati

15、on 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:第20页The Formation of ExpectationsWhen =1, the unemployment rate affects not the inflation rate, but the change in the e

16、xpected inflation rate.Since 1970, a clear negative relation emerged between the unemployment rate and the change in the inflation rate.第21页The Formation of ExpectationsThe line that best fits the scatter of points for the period 1970- is:Change in Inflation versus Unemployment in the United States,

17、 1970-第22页The Formation of ExpectationsThe original Phillips curve is:The modified Phillips curve, also called the expectations-augmented Phillips curve, or the accelerationist Phillips curve, is:第23页Back to the NaturalRate of UnemploymentFriedman and Phelps: the unemployment rate can not be sustain

18、ed 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,第24页Back to the NaturalRate of Unemploymentthen,Giventhen,Finally, assuming that et is well approximated

19、by t-1, then: 第25页Back to the NaturalRate of UnemploymentThe non-accelerating-inflation rate of unemployment, (or NAIRU), is the rate of unemployment required to keep the inflation rate constant.第26页A Summary andMany Warnings8-3Variations in the Natural Rate of Unemployment Across Countries第27页Varia

20、tions in the Natural Rateof Unemployment over TimeNote: and z may not be constant over time.A high unemployment rate does not necessarily reflect a high natural rate of unemployment. 第28页Variations in the Natural Rate of Unemployment Across CountriesChange in Inflation Versus UnemploymentEuropean Un

21、ion, 1961-第29页High Inflation and thePhillips Curve RelationThe relation between unemployment and inflation is likely to change with the level 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 i

22、ndexation mechanism)第30页High Inflation and thePhillips Curve RelationLet 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 et.When

23、 =0, all wages are set on the basis of expected inflation (equal to last years inflation), then:第31页High Inflation and thePhillips Curve RelationWhen is positive,第32页Deflation and thePhillips Curve RelationGiven the very high rate of unemployment during the Great Depression, we would have expected a

24、 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.第33页ProblemsChapter 8: Problems 2, 3, 5第34页The Aggregate Demand Relation: From Nominal Money Growth and

25、Inflation to Output GrowthIn 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.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

26、38页Summarizing第39页The Medium RunInflation and Unemploymentin the Medium Run第40页DisinflationTo achieve lower inflation, the rate of nominal money growth must be reduced. Here is what happens:9-3In the aggregate demand relation,Then, from Okuns law,Finally, according to the Phillips curve relation:But

27、 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.第41页How Much Unemployment?and for How Long?Disinflation = Higher unemploymentA point-

28、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.第42页How Much Unemployment?and for

29、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.第43页Working Out the Pathof Nominal Money Growt

30、hThis table shows the path of nominal money growth needed to achieve 10% disinflation over five years.Table 9-1 Engineering Disinflation012345678Inflation (%)141210864444Unemploymentrate (%)688888666Output growth (%)323333833Nominal money growth (%)17101311971277第44页Working Out the Pathof Nominal Mo

31、ney GrowthThis figure shows the path of unemployment and inflation implied by the disinflation path in Table 9-1.A Disinflation Path第45页 Expectations, Credibility,and Nominal Contracts9-4This section examines how changes in expectation formation might affect the unemployment cost of disinflation.Two

32、 separate groups of macroeconomists challenge the traditional notion that policy can change the timing, but not the number of point-years of excess unemployment.第46页Expectations and Credibility:The Lucas CritiqueThe Lucas critiqueThomas Sargent argued that in order to achieve disinflation, any incre

33、ase in unemployment would have to be only small.The essential ingredient of successful disinflation, he argued, was credibility of monetary第47页Normal Rigidities and Contractsnominal rigidities (Fisher and Taylor)staggering of wage decisionsThe 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 ha