文档介绍：Chapter 11: Inflation, activity, and Money Growth
11-1: Output, Unemployment, and Inflation
11-2: The Medium Run
11-3: Disinflation: A First Pass
11-4: Expectations, Credibility, and Nominal Contracts
11-5: The . Disinflation, 1979 to 1985
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11-1: Output, Unemployment, and Inflation
In thinking about the interactions between output, unemployment, and inflation, you must keep in mind three relations:
’s law, which relates the change in unemployment to the deviation of output growth from normal.
Phillips curve, which relates the change in inflation to the deviation of unemployment from natural rate.
aggregate demand relation, which relates output growth to the rate of growth of nominal money minus the rate of inflation.
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Okun’s law:output growth and changes in unemployment
We assumed that output and employment moved together, so change in output led to equal changes in employment. And we assumed the labor force was constant, so changes in employment were reflected one for one in opposite changes in unemployment. Let gyt denote the growth rate of output. Then, under these two assumptions ,the following relation should hold:
ut –ut-1=-gyt ()
continue
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Okun’s law:output growth and changes in unemployment
According to the experience, the relation actually should be:
ut –ut-1= -(gyt – 3%) ()
Equation () differs in two ways from equation ()
Annual output growth has to be at least 3% to prevent the unemployment rate from rising
The coefficient on the deviation of output growth from the normal growth rate is – in equation (), not – in equation ().
To continue
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Okun’s law:output growth and changes in unemployment
There are two reasons why:
adjust employment less than one for one in response to deviations of output growth from the normal growth rate. More specifically, output growth that is 1% above normal for one year leads to only a % increase in t