Note that this solution deviates from agents’ expectation, or equivalently, central bank’s ex-ante commitment. This is the time inconsistent problem found by Kydland-Prescott (1977, JPE) and BarroGordon (1983, JPE)
Unemployment A man willing to work, and unable to find work, is perhaps the saddest sight that fortune's inequality exhibits under the sun Thomas Carlyle Unemployment is the macroeconomic problem that affects people most directly and severely. For most people, the loss of a job means a reduced living standard
Main Idea Nominal Rigidity nominal price rigidity nominal wage rigidity Real Rigidity Real price rigidity Real wage rigidity Unemployment, Economic Cycle and Policy Suggestion
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
Topics to be Discussed Basic principles of building macroeconomic model Micro basis of macroeconomics &Choices of households Choices of firms Introduction to labor market
Gross Domestic Product (GDP) Defintion: GDP is the total market value of all final goods and services produced by a country Final versus Intermediate By final\, we mean the goods and service that are purchased for final use by purchaser and not for resale or further processing. The meaning intermediate is opposite to final
