macroeconomic introduction

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Blanchard, Amighini and Giavazzi, Macroeconomics: A European Perspective PowerPoints on the Web, 2ndedition Pearson Education Limited 2014

INTRODUCTIONCHAPTER 1:

A TOUR OF THE WORLD


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1.1 Europe and !e Euro

When macroeconomists stud an econom, the !irst

loo" at three varia#les$

% &ut'ut

% (he unem'loment rate

% (he in!lation rate


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1.1 Europe and !e Euro #Coninued$

Ta%le 1.1 &ro'!( une)plo*)en and in+laion in !e EU ,in-e 11Source$ )tatistical Anne* o! the Euro'ean Econom, )'ring 2012+


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(he economic 'er!ormance o! Euro'ean countries a!ter the turn o!the millennium has not #een as good as it as in the 1--0s$

% Average annual out'ut groth re!lected a signi!icant slodon in

all o! the largest Euro'ean economies since 200., and arecession in 200-+

% Lo out'ut groth as accom'anied # 'ersistentl highunem'loment+

% (he onl good nes is a#out in!lation+ Average annual in!lationas 1+-/ in the E and 1/ in the euro area+

% n the economies o! central Euro'e in!lation um'ed during thetransition #ut it sta#ilised in the !olloing decade+


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(hree issues dominate the agenda o! Euro'ean

macroeconomists$

% 3igh unem'loment

% Groth o! income 'er 'erson

% ommon currenc



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3o can Euro'ean unem'loment #e reduced5

Fiure 1.2 T!e une)plo*)en rae in -oninenal Europe and !e USA ,in-e 134

ntil the #eginning o! the 1-.0s, the unem'loment rate in the !our maor Euro'ean

countries as loer than the ) rate, #ut then it ra'idl increased+Source$ 67, World Economic &utloo", )'ring 200-, '+ 1+ 89ata !rom 2010 onards are !orecasts+:



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(here is still disagreement a#out the causes o! highEuro'ean unem'loment$

%

Politicians o!ten #lame macroeconomic 'olic+% 6ost economists #elieve, hoever, that the source o!

the 'ro#lem is la#our mar"et institutions+

%

)ome economists 'oint to hat the call la#our mar"etrigidities+

% &ther economists em'hasise the !act thatunem'loment is not high everhere in Euro'e+

3o can Euro'ean unem'loment #e reduced5



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Wh has income ga' #eteen E ; )A started to gro5

Ta%le 1.2 In-o)e per -apia in Europe -o)pared o !e USA #USA 6 144$Source$ OECD Economic Outlook data#ase+



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% )u''orters o! the euro 'oint !irst to its enormous

sm#olic im'ortance$ a!ter a long histor o! ars

and con!licts,a large num#er o! Euro'ean

countries are no lin"ed # a common currenc% &thers orr that the sm#olism o! the euro ma

come ith some economic costs$ the recent crisis

that hit the euro and the euro countries is among

those costs

What has the euro done !or Euro'e5



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1.2 T!e E-ono)i- Ouloo7 in !e USA

Fro) an e-ono)i- poin o+ 8ie'( !ere i, no 9ue,ion !a !e

14, 'ere a)on, !e %e, *ear, in re-en )e)or*.

In !e re-en pa,( !o'e8er( !e e-ono)* !a, ,lo'ed do'n. Daa

+or 2411 do no ,ee) o ,ue, !a !e e-ono)* !a, ,ared

ro'in aain+

Ta%le 1." &ro'!( une)plo*)en and in+laion in !e USA ,in-e 11

O S


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#Coninued$

What are the reasons !or the recent slo don5

Fiure 1." Oil pri-e, #in 2445 US dollar,$: anuar* 1/3; De-e)%er 2445

(he 'rice o! oil reached a historic high in 200.+

O S


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#Coninued$

Fiure 1./ US !ou,e pri-e, a -on,an dollar,: 1554;2424

3ouse 'rices in the )A #oomed a!ter 2000+

What are the reasons !or the recent slo don5

1 2 T! E i O l 7 i ! USA


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)hould e orr a#out the ) trade de!icit5

Fiure 1.0 T!e US rade de+i-i ,in-e 14

(he ) trade de!icit has increased # a#out 1/ o! G9P in 1--0 to


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1." T!e Lare, E)erin E-ono)ie,

Brazil, hina, ndia and =ussia 8hich are o!ten called

B=s: have gron ra'idl over the last decade and

are no the largest economies outside o! the grou' o!

advanced countries+Where does the groth come !rom5

% 3igh accumulation o! ca'ital

% >er !ast technological 'rogress


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1./ Loo7in A!ead

(hese are the ?uestions to hich ou have #een e*'osed in thischa'ter$

% What determines e*'ansions and recessions5 an monetar 'olic

#e used to 'revent a recession in the nited )tates5 3o ill theeuro a!!ect monetar 'olic in Euro'e5

% Wh is in!lation so much loer toda than it as in the 'ast5 anEuro'e reduce its unem'loment rate5 )hould the nited )tatesreduce its trade de!icit5

% Wh do groth rates di!!er so much across countries, even over long'eriods5 3as the nited )tates entered a @e Econom, in hichgroth ill #e much higher in the !uture5 an other countriesemulate hina and gro at the same rate5


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&a!erin


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=e* Ter),

% Euro'ean nion 8E2:

% B=s

% &rganisation !or Economic oo'eration and

9evelo'ment 8&E9:

% nternational 6onetar 7und 867:

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macroeconomic introduction