ECON5002_Macroeconomics_2007 Semester 2_BlanchardSheen2e TOPIC 3

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Political Uncertainty and Corporate Investment Cycles

Political Uncertainty and Corporate InvestmentCyclesBRANDON JULIO and YOUNGSUK YOOK∗November5,2010ABSTRACTWe document cycles in corporate investment corresponding with the timing of na-tional elections around the world.During election years,ﬁrms reduce investment ex-penditures by an average of4.8%relative to non-election years,controlling for growthopportunities and economic conditions.The magnitude of the investment cycles varieswith different country and election characteristics.We investigate several potential expla-nations andﬁnd evidence supporting the hypothesis that political uncertainty leadsﬁrmsto reduce investment expenditures until the electoral uncertainty is resolved.Theseﬁnd-ings suggest that political uncertainty is an important channel through which the politicalprocess affects real economic outcomes.∗Julio is at London Business School and Yook is at the Graduate School of Business at Sungkyunkwan Uni-versity.Patrick Bolton,Murillo Campello,Ethan Cohen-Cole,Alex Edmans,Zsuzsanna Fluck,Paolo Fulghieri, Dirk Hackbarth,Cam Harvey(Editor),Li Jin,Tae-Young Kim,Stewart Myers,Bang Nguyen-Dang,Meijun Qian,Philipp Schnabl,Vikrant Vig,Michael Weisbach,Toni Whited,two anonymous referees,and an asso-ciate editor provided useful comments as did seminar participants at the China Europe International Business School,Georgetown University,Hong Kong Baptist University,Hong Kong Polytechnic University,Korea Uni-versity,London School of Economics,Nanyang Technological University,Norwegian School of Economics and Business Administration,Seoul National University,Sungkyunkwan University,University of North Carolina at Chapel Hill,the2008Chinese International Conference in Finance,the2008AsianFA-NFA International Con-ference,the2009Paris Spring Corporate Finance Conference,the2009Singapore International Conference on Finance,the2009European Finance Association Conference,the2010American Finance Association Confer-ence,and the2010Finance Down Under Conference.“...how unrealistic any theory of investment opportunity is which leaves the polit-ical factor out of account”.Joseph A.Schumpeter(1939)The relationship between politics and economic outcomes has a long history in research and public debate.One important way in which politics is hypothesized to inﬂuence real decisions is through the channel of uncertainty and instability.In particular,the incentives and uncer-tainties associated with possible changes in government policy or national leadership have implications for the behavior of both politicians andﬁrms.The effects of policy uncertainty are especially relevant in light of the recentﬁnancial crisis and recession.There is a great deal of uncertainty as to how governments will shape policy to stimulate investment in the short run and formulate regulatory and economic policy in the long run.It has been argued that this uncertainty itself may be hindering a recovery by inducingﬁrms to delay investment until the uncertainty related to futureﬁnancial regulation and macroeconomic policy is resolved.1In this paper,we examine the effects of political uncertainty on the investment behavior of ﬁrms in the context of national elections.Elections in which the national leader is determined provide an interesting setting to study the effects of political uncertainty on investment for two important reasons.First,while standard models of policy typically assume a single welfare maximizing planner that makes policy choices over the entire life of the economy,the real world is characterized by leaders who face limited terms and may be replaced by other lead-ers with different policy preferences.Election outcomes are relevant to corporate decisions as they have implications for industry regulation,monetary and trade policy,taxation,and,in more extreme cases,the possible expropriation or nationalization of privateﬁrms.Second, investigating the impact of political uncertainty on investment is a challenging task due to the potential endogeneity between uncertainty and economic growth as the economic downturn itself has arguably generated a great deal of political uncertainty.Elections around the world provide a natural experimental framework for studying political inﬂuences in corporate in-vestment,allowing us to disentangle some of the endogeneity between economic growth and political uncertainty.If political uncertainty is higher when changes in national leadership are more probable,elections provide a recurring event that helps isolate the impact of policy uncertainty on investment from other confounding factors.The timing of elections is out of the control of any individualﬁrm and evenﬁxed in time by constitutional rules for a largeproportion of observations in our sample.In addition,elections around the world take place in different years over time,allowing us to net out any global trends in corporate investment. Using national elections in48countries between1980and2005,we examine changes in cor-porate investment as political uncertaintyﬂuctuates by comparing corporate behavior in the year leading up to the national election outcomes with that in non-election years.The intuition underlying the relationship between electoral uncertainty and investment is simple:if an election can potentially result in a bad outcome from aﬁrm’s perspective,the option value of waiting to invest increases and theﬁrm may rationally delay investment until some or all of the policy uncertainty is resolved.The relationship between uncertainty and real investment has been modeled by Bernanke(1983)and Bloom,Bond and Van Reenen(2007), among others.In these models,ﬁrms become cautious and hold back on investment in the face of uncertainty.Others have modeled the effects of political uncertainty in a macroeco-nomic context.Rodrik(1991)and Pindyck and Solimano(1993)are prominent examples of this literature in which the uncertainty brought about by political factors leadsﬁrms to choose lower levels of investment expenditures.Chen and Funke(2003)model the private invest-ment decision in emerging markets in the face of policy uncertainty.More recently,Bloom, Flotoetto and Jaimovich(2009)model business cycles as a function of variation in levels of macroeconomic uncertainty.The idea that political instability can deter investment on the aggregate level is supported by empirical evidence.Barro(1991)and Alesina and Perotti(1996)ﬁnd that measures of political instability and violence are correlated with cross-country differences in investment rates.Pindyck and Solimano(1993)and Mauro(1995)ﬁnd evidence that political uncertainty and an index measuring bribery and corruption are negatively related to investment spending at the aggregate level.However,some difﬁculties arise in interpreting the aggregate evidence. First,it is not clear whether the various measures of political instability are exogenous to the economic conditions and the aggregate investment.Second,as discussed in Pindyck and Solimano(1993),the models of investment under uncertainty are less clear about how un-certainty affects long-run equilibrium investment rates,deﬁned as the ratio of investment to capital stock,as uncertainty affects both the optimal capital stock and investment in the long run.The predictions of the models are less ambiguous when there are temporary shocks to the level of uncertainty as the uncertainty mainly works through investment rather than capitalstock in the short run.Indeed,Bernanke(1983)shows that events whose long-run implica-tions are uncertain can generate investment cycles by increasing the returns to waiting for new information,particularly when the source of uncertainty periodically renews itself over time.A temporary increase in uncertainty surrounding national elections creates incentives that may induce immediate declines in investment expenditures.Our empirical investigation provides results consistent with the political uncertainty hy-pothesis.We document novel and robust evidence that political uncertainty around national elections induces cycles in corporate investment.In the period leading up to the election,in-vestment expenditures decline by an average of4.8%,controlling for growth opportunities, cashﬂows,and economic conditions.To address the concern that the results may be driven by elections that are notﬁxed in time by constitution,we repeat the analysis by estimating our investment regressions only for countries withﬁxed election timing andﬁnd similar re-sults.Additionally,we examine the determinants of early elections andﬁnd a strong positive correlation between economic growth and the probability of holding an early election.To the extent that aﬁrm’s investment expenditures are positively correlated with economic growth, this suggests that the inclusion of endogenously timed elections in the regressions has the net effect of reducing the dampening effect of electoral uncertainty on investment as the elections are generally called during periods of relatively high economic performance.Across countries,weﬁnd that the temporary decline in investment expenditures is larger in countries with civil law origins,fewer checks and balances,less stable governments,and in countries with a higher ratio of central government spending to GDP.Within countries,the cycles are more pronounced forﬁrms in industries considered to be more sensitive to political outcomes.Elections in which the outcome is“close”as measured by voting results lead to deeper investment cycles than elections in which the victor wins by a large margin.We also ﬁnd that investment rates drop more in election years in which the incumbent national leader is classiﬁed as“market-friendly”by the World Bank.We also show that the election-year drop in investment is followed by a small,temporary increase in investment in the year imme-diately following the election as the uncertainty over election outcomes subsides.However, the overall magnitude of the post-election increase in investment is smaller than that of the earlier decline.We also measure changes in cash holdings,ﬁnding temporary increases in cash balances in the year prior to the election in the amount of4.3%of the average cash toassets ratio,controlling forﬁrm and economic conditions.The increase in cash holdings is similar in magnitude to the election-year decline in investment,suggesting that the funds that would have been used as investment are temporarily held as cash until the election uncertainty is resolved.Political uncertainty is not the only mechanism whereby real outcomes can be affected around the timing of elections.There are two plausible alternative explanations in the lit-erature suggesting election-induced cycles in investment.Theﬁrst is the political business cycles hypothesis.Starting with Nordhaus’s(1975)model of political business cycles,there has been much debate over whether incumbents manipulateﬁscal and monetary policy instru-ments to inﬂuence the level of economic activity prior to an election in order to maximize the probability of reelection.Thus,one alternative explanation for our results is that corporate investment is reacting to changing macroeconomic fundamentals.While the political business cycle hypothesis predicts that average economic activity should be higher just before the elec-tion,the actions used to stimulate the economy could have a crowding-out effect on private investment.The second alternative explanation is related to the value of political connections. Someﬁrms may have incentives to change their investment behavior to help ensure that their political connections remain in ofﬁce through the election cycle.Bertrand,Kramarz,Schoar and Thesmar(2006)investigate the behavior of politically connectedﬁrms around municipal elections in France,andﬁnd that theﬁrms managed by connected CEOs boost their invest-ment during election years,particularly in politically contested areas,likely in an attempt to help their connection get re-elected.We conduct formal tests of these alternative hypotheses andﬁnd no evidence that they are operating in our sample ofﬁrms.We therefore view the political uncertainty hypothesis to be the explanation among existing theories that bestﬁts the patterns in the data.Theseﬁndings have two important contributions.First,we document a new stylized fact regarding corporate investment around the world.That is,there is a tendency forﬁrms to reduce investment in election years.These results demonstrate an important link between the political process and real outcomes.Second,the results suggest that political uncertainty mat-ters for aﬁrm’s real investment and savings decisions.This provides an interesting illustration of the impact of uncertainty in general as an important determinant of investment dynamics.As far as we know,we are theﬁrst to examine the effects of national elections onﬁrm-level investment behavior around the world.The remainder of the paper proceeds in the following manner.Section II develops the empirical predictions and discusses the identiﬁcation strategy.Section III summarizes the ﬁrm characteristics and the election data.Section IV presents our main empirical results related to corporate investment cycles around elections,including various subsample analyses, multiple robustness checks,and an examination of changes in corporate cash holdings around the election period.Section V concludes.I.Hypothesis Development and Empirical StrategyWhen a particular investment project is characterized by some degree of irreversibility and uncertainty over future cashﬂows or discount rates,the value of the investment project will be affected by the same factors that inﬂuence the pricing ofﬁnancial options,in particular,the volatility or uncertainty of the value of the underlying asset.The application of option pricing to capital budgeting has generated many empirical predictions and insights on how investment dynamics change in the face of uncertainty.Some classic examples include McDonald and Seigel(1986),who examine the valuation of operating options and the value of waiting to invest.They demonstrate that even moderate amounts of uncertainty can more than double the required rate of return for investment projects.Ingersoll and Ross(1992)model the timing decision in the face of interest rate uncertainty.They argue that,under the assumptions of irreversibility and uncertainty,the simple net present value(NPV)rule is not optimal from a value-maximizing perspective.Uncertainty increases the value of waiting to invest through what Bernanke(1983)termed the“bad news”principle.That is,an increase in uncertainty causes reductions in current investment only if there is some probability of a bad outcome.In the context of national elec-tions,this suggests thatﬁrms will delay investment in anticipation of possible negative changes in the country’s macroeconomic policy,taxation,monetary policy,or the general regulatory environment.However,in some cases,the outcome of an election could be construed as good news,regardless of who wins in the end.For example,if the current government is corruptor incompetent,ﬁrms could view a likely change in power as good news and hence may not reduce investment prior to the realization of the election outcome since any different outcome may be better than the current state of affairs.The bad news principle is more subtle in this case.For example,suppose aﬁrm is choosing among several mutually exclusive investment projects,each with a positive expected return.Also suppose that the outcome of an upcoming election will increase the expected return of each of the investment projects,regardless of the outcome.Theﬁrm still has an incentive to delay investment if the outcome would reorder the rankings of the individual projects in terms of expected returns.Thus,the bad news principle does not require the possibility of extreme policies such as nationalization of private assets to induce changes in investment.Even positive changes in policy may induce an incentive forﬁrms to wait to invest as the outcome will still have implications for howﬁrms allocate investment spending across various investment opportunities.If political uncertainty matters forﬁrms,then the recurring nature of the political uncer-tainty around elections can generate cycles in investment spending.This is an application of Bernanke’s bad news principal that the possibility of a bad election outcome induces aﬁrm to hold off on its investment projects.This leads to our primary hypothesis that investment expenditures are expected to decline in the year leading up to the election.That is,we expect the average effect of electoral uncertainty to be a temporary decline in the conditional mean investment rate for allﬁrms in the sample.The bad news principle also suggests that the value of waiting to invest will vary fromﬁrm toﬁrm and across countries.Within countries,the magnitude of the investment cycle may vary across elections,depending on the the degree of uncertainty regarding election outcomes.The spread between potential outcomes as well as the likelihood of each outcome will generate heterogeneity in the size of observed investment cycles.Across countries,we hypothesize that investment cycles will be more pronounced in countries with a higher probability of policy changes or a larger variation in possible policy outcomes after the election.Since we are investigating national elections,we expect the effect of elections to be larger for countries with more centralized governments.Political institutions may matter as well.Countries in which political decisions are more constrained by various checks and balances are less likely to experience large policy swings following a change of power.For example,presidential systems are typically considered to have greater checks and balances but lessﬂexibility inpolicy making relative to parliamentary systems,suggesting that perhaps large policy swings are more common in parliamentary systems.2We also expect that countries with less stable governments in general will experience larger changes in investment around elections.Within countries,we hypothesize that the drop in investment expenditures will be larger when the election outcome is more uncertain.In particular,we expect that cycles will be more pronounced for elections with close outcomes relative to those with large margins of victory. The amount of uncertainty regarding the impending election outcome is unobservable,but we do observe the election results and vote counts for each ing the size of the margin of victory as a proxy for the degree of outcome uncertainty in any given election, we examine whether investment cycles vary with the degree of uncertainty across elections within countries.We also investigate the political platform of the incumbent leader during the election year.The political platform of an incumbent with respect to economic policy may have asymmetric implications on investment cycles.Firms are likely to view a possible shift in leadership from a market-friendly leader to a socialist leader as worse news than a possible shift in the other direction.Our empirical strategy employs the timing of national elections around the world to test the political uncertainty hypothesis.It is important to note that the timing of elections is not a direct measure of political uncertainty.Hence,an important identiﬁcation assumption is that political uncertainty is indeed higher on average in the period leading up to an election compared to other time periods.There is evidence fromﬁnancial markets that the uncertainty related to elections and political changes are reﬂected in asset prices.Bialkowski,Gottschalk and Wisniewski(2008)and Boutchkova,Doshi,Durnev and Molchanov(2010)examine the stock market volatility around national elections andﬁnd that volatility is signiﬁcantly higher than normal during the election period.Boutchkova et al.(2010)ﬁnd that the return volatility is higher around elections forﬁrms operating in politically sensitive industries,suggesting that the increased volatility reﬂects a higher political risk.Bernhard and Leblang(2006)document changes in bond yields,exchange rates,and equity volatility around elections and other po-litical changes and show that these changes are larger during elections with less predictable outcomes.This evidence provides support for our identiﬁcation assumption that political un-certainty is higher than normal during elections.Our empirical analysis produces two broad sets of results.In ourﬁrst set of results,we employ the variation across elections,countries,andﬁrms to help us identify the uncertainty channel to explain the reduction in corporate investment.Our basic approach in thisﬁrst step is to examine variation in corporate investment around the timing of national elections and to demonstrate that these changes are larger for events in which the uncertainty related to election outcomes is higher.We recognize that other mechanisms may be at play during election periods that can lead to changes in investment behavior.Therefore,our second set of results attempts to distinguish the political uncertainty channel from other existing hypotheses, namely the political business cycle hypothesis and the possible effects of political connections.II.Data DescriptionA.Election DataThis study considers248national elections in48countries held between1980and2005in which the outcome determined the national leader directly or indirectly.The detailed election information is obtained from a variety of sources.The primary source for election and regime change data is the Polity IV database maintained by the Center for International Develop-ment and Conﬂict Management at the University of Maryland.This database contains annual information on the regime and authority characteristics of all independent states with total populations greater than500,000.The second major source of information is the World Bank Database of Political Institutions.This source provides information about electoral rules and the classiﬁcation of political platforms for the elected leaders and candidates.We supplement the election data with various internet sources3for cases in which the election information is missing from the Polity IV database or the Database of Political Institutions.Theﬁrst task for the election data collection is to identity the chief executive of each coun-try and the national elections associated with the selection of the chief executive.In a country with a presidential system,the supreme executive power is normally vested in the ofﬁce of the president.Thus,presidential elections are naturally considered in our analysis for coun-tries with presidential systems.In a parliamentary system,the executive power is normallyvested in a cabinet responsible to parliament.In such a country,the prime minister or pre-mier,being the head of the cabinet and leader of the parliament,functions as the actual chief executive of the nation.Thus,legislative elections are utilized for countries with parliamen-tary systems as the outcome of such legislative election has the foremost inﬂuence over the appointment of prime minister.4Some countries use a hybrid system combining elements of both parliamentary and presidential democracy;a president and a prime minister coexist with both presidential and legislative elections held nationally.In such cases,the constitutional framework and practice is examined in greater detail to understand how executive power is divided between the two leaders,and the election associated with the leader who exerts more power over executive decisions is selected for the study5.As a robustness check,we repeat our analysis excluding the four countries for which the classiﬁcation requires some discretion (Finland,France,Pakistan and Poland)andﬁnd that the results are unchanged.The resulting data set comprises31countries with legislative elections,16countries with presidential elections,and one country(Israel)with prime ministerial elections.6Table I presents the classiﬁcation of political systems and the number of elections utilized for each of the48countries in our sample.The table also shows the origin of each country’s legal system,as reported by La Porta,Lopez-de-Silanes,Shleifer,and Vishny(1998).[TABLE I HERE]Another important characteristic of national elections is whether the timing of the elec-tions is exogenously speciﬁed by electoral ernments under some electoral systems can be dissolved before the expiry of its full term for various reasons,and an election is then normally called to form a new government.This complicates the interpretation of our empirical results as the timing of elections may be endogenously connected to the country’s economic performance over time.Ito(1990),for example,documents that Japanese general elections have coincided with the periods of economic expansion,suggesting that the govern-ment opportunistically selected the timing of elections.To deal with the possible endogeneity of election timing,we classify countries as having either exogenous timing or endogenous timing.All countries with a record of early elections are classiﬁed as having endogenous tim-ing.All presidential elections,with the exception of Sri Lanka,are held on a regular basis and are classiﬁed as having exogenous timing.This leaves unclassiﬁed seven countries withparliamentary systems and one country with hybrid system.In order to classify those remain-ing countries,we refer to electoral laws and practices as well as the classiﬁcation provided by Alesina,Cohen and Roubini(1992)7.Accordingly,three of the remaining countries,Czech Republic,Finland,and New Zealand,are classiﬁed as having endogenous timing8and the rest are classiﬁed as having exogenous timing.Table I reports the election timing classiﬁcation for every country in our sample.Panel A of Table II summarizes the election data.Elections are held every3.8years on average and the average nominal term of a chief executive is4.4years.The next row reports the political platform of incumbent governments in the election years.The classiﬁcation is based on the World Bank Database of Political Institutions,which refers to various sources including Political Handbook yearbooks in order to identify party orientation with respect to economic policy.9The World Bank classiﬁes a government as being right-leaning if the political party is deﬁned as conservative,Christian democratic,or right-wing by these sources. Left-leaning parties are those that are deﬁned as communist,socialist,social democratic,or left-wing.Centrist parties are those that advocate strengthening private enterprise in a social-liberal context.We deﬁne the the incumbent political party as being”market-friendly”if the incumbent government in the election year is classiﬁed as right-leaning or centrist by the World Bank.Accordingly,63.3%of the incumbent administrations in the year leading up to an election are classiﬁed as market-friendly,and the remaining36.7%are classiﬁed as left-leaning.We also summarize the distribution of historical vote counts to give a sense for the degree of uncertainty surrounding a given election.On average,the winner of an election obtains41.9%of the total vote,followed by the runner-up at28.7%,and the third-place candidate receives12.2%of the total.The table also shows that45.6%of the elections are classiﬁed as having exogenous timing.Table II also shows that54%of the elections lead to the replacement of the national leader and43%of the elections result in change in the ruling party.[TABLE II HERE]B.Country-Level DataWe obtain institutional and macroeconomic data from various sources.The World Devel-opment Indicators from the World Bank is our primary source for the macroeconomic vari-ables including real GDP,central government spending,inﬂation,and real interest rate.We obtain data on the money supply(M1)from Political Risk Service’s International Country Risk Guide(ICRG).ICRG also reports the government stability ratings on a monthly basis for the countries in our sample.The government stability index assigns numbers between0and 12,where higher values indicate more stable governments.This time-varying index assesses the government’s ability to carry out its declared programs,and its ability to stay in ofﬁce.The Database of Political Institutions provides a measure of the effectiveness of checks and balances in each political system on an annual basis10.The basic idea is to capture the number of decision makers whose agreement is necessary for the approval of policy changes. The measure is a count of the number of veto players in the political system at a given point in time based on the prevailing electoral rules and laws.It also takes into account whether the executive and legislative branches of government are controlled by the same party,which effectively reduces the checks and balances relative to having different parties controlling different branches of government.In presidential systems,the count is increased by one for the president and increased by one for each additional legislative body.For parliamentary systems,the count is increased by one for the prime minister and increased by the number of parties included in the governing coalition.The number is reduced if the party of the executive is the same as the largest party in any particular chamber of government.Table II shows that the average of checks in the sample is3.95with the standard deviation of1.95.The index of central bank independence(CBI)measures the extent to which the central bank is independent from the political power.This annual,time-varying index is taken from Cukierman,Webb,and Neypati(1992)for the period between1980and1989,and from Polillo and Guillen(2005)for the period between1990and2000.Initially,Cukierman,Webb,and Neypati(1992)constructed the index for72industrial and developing countries for the period between1950and1989.11Later,Polillo and Guillen extended the index to the period between 1990and2000according to the deﬁnition of Cukierman,Webb,and Neypati(1992).The index is a continuous score ranging between zero and one,where one indicates maximum。

ECON5001_Microeconomics_2008 Semester 1_Mid_Semester exam ECON5001_2004

Discipline of EconomicsECON 5001: MICROECONOMICSMid-Semester Test(Friday September 10, 2004)Instructions1.The test lasts for 1½ hours. Maximum marks = 40.2.The test consists of two parts. You must answer ALL questions in both parts.(i).Part A Multiple Choice: 20 questions (1 mark each).Answer on the sheet provided.(ii).Part B Problems: 2 problems (10 marks each).Answer in the booklet provided.3.Put your name, SID, and stream on the multiple choice answer sheet, and theexam booklet. Failure to comply may result in a mark of zero.4.This is a closed book exam: no notes are allowed. Non-programmable calculatorsare permitted.5.University of Sydney Examination Regulations apply. No person may leave theexamination room in the first 30 minutes or in the last 20 minutes of the exam. 6.GOOD LUCK!Part A: Multiple Choice (20 marks)1. The slope of an indifference curve reveals:a.that preferences are complete.b.the marginal rate of substitution of one good for another good.c.the ratio of market prices.d.that preferences are transitive.e.none of the above.2. Jane is trying to decide which courses to take next semester. She has narroweddown her choice to two courses Econ 1 and Econ 2. Now she is having trouble.She just cannot decide whi ch of the two courses to take. It’s not that she isindifferent between the two courses, she just cannot decide. An economistwould say that this is an example of preferences that:a.are not transitive.b.are incomplete.c.violate the assumption that more is preferred to less.d.all of the above.3. If a consumer must spend her entire income on some combination of twocommodities and chooses to spend it all on just one of the commodities then:a.the other commodity is an economic bad.b.the other commodity must have zero marginal utility.c.the other commodity generates less utility per dollar spent on the good.d.the two commodities must be perfect substitutes.4. The change in the price of one good has no effect on the quantity demanded ofanother good. These goods are:plements.b.substitutes.c.both inferior.d.both Giffen goods.e.none of the above.5. The income-consumption curve for Dana between Q A and Q B is given by theequation Q A = Q B. His budget constraint is given as:120 = Q A + 4Q BHow much Q A will Dana consume to maximize utility?a.0.b.24.c.30.d.60.e.More information is needed to answer this question.6. Assume that beer is a normal good. If the price of beer rises, then thesubstitution effect results in the person buying ______ of the good and theincome effect results in the person buying ______ of the good.a.more, more.b.more, less.c.less, more.d.less, less.7. Which of the following will cause the price of beer to rise?a. A shift to the right in the demand curve for beer.b. A shift to the left in the supply curve of beer.c.both (a) and (b).d.none of the above.8. Blanca would prefer a certain income of $20,000 to a gamble with a 0.5probability of $10,000 and a 0.5 probability of $30,000. Based on thisinformation:a.we can infer that Blanca neutral.b.we can infer that Blanca is risk averse.c.we can infer that Blanca is risk loving.d.we cannot infer Blanca's risk preferences.Wanting to invest in the computer games industry, you select Whizbo, Yowzo and Zowiebo as the three best firms. Over the past 10 years, the three firms have had good years and bad years. The following table shows their performance:9. Refer to the table above. Where is the highest expected revenue, based on the10 years' past performance?a.Whizbo.b.Yowzo.c.Zowiebo.d.Whizbo and Yowzo.e.Yowzo and Zowiebo.10. The price of good A goes up. As a result the demand for good B shifts to theleft. From this we can infer that:a.good A is used to produce good B.b.good B is used to produce good A.c.goods A and B are substitutes.d.goods A and B are complements.e.none of the above.11. A firm uses two factors of production. Irrespective of how much of each factoris used, both factors always have positive marginal products which imply thata. isoquants are relevant only in the long run.b. isoquants have negative slope.c. isoquants are convex.d. isoquants can become vertical or horizontal.e. none of the above.12. A firm's marginal product of labor is 4 and its marginal product of capital is 5.If the firm adds one unit of labor, but does not want its output quantity tochange, the firm shoulda. use five fewer units of capital.b. use 0.8 fewer units of capital.c. use 1.25 fewer units of capital.d. add 1.25 units of capital.13. If input prices are constant, a firm with increasing returns to scale can expecta. costs to double as output doubles.b. costs to more than double as output doubles.c. costs to go up less than double as output doubles.d. to hire more and more labor for a given amount of capital, since marginalproduct increases.e. to never reach the point where the marginal product of labor is equal tothe wage.14. Which of the following is not an expression for the cost minimizing combinationof inputs?a. MRTS = MP L / MP K.b. MP L / w = MP K / r.c. MRTS = w / r.d. MP L / MP K = w / r.e. None of these.15. A firm wants to minimize the total cost of producing 100 tons of dynamite. Thefirm uses two factors of production, chemicals and labor. The combination of chemicals and labor that minimizes production costs will be found wherea.the marginal products of chemicals and labor are equal.b.the ratio of the amount of chemicals used to the amount of labor usedequals the ratio of the marginal product of chemicals to the marginalproduct of labor.c.the ratio of the amount of chemicals used to the amount of labor usedequals the ratio of the price of chemicals to the wage rate.d.the production of an additional unit of dynamite costs the same regardlessof whether chemicals or labor are used.e.none of the above.16. A firm employs 100 workers at a wage rate of $10 per hour, and 50 units ofcapital at a rate of $21 per hour. The marginal product of labor is 3, and themarginal product of capital is 5. The firma. is producing its current output level at the minimum cost.b. could reduce the cost of producing its current output level by employingmore capital and less labor.c. could reduce the cost of producing its current output level by employingmore labor and less capital.d. could increase its output at no extra cost by employing more capital andless labor.e. both (b) and (d) are true.17. When an isocost line is just tangent to an isoquant, we know thata.output is being produced at minimum cost.b.output is not being produced at minimum cost.c.the two products are being produced at the least input cost to the firm.d.the two products are being produced at the highest input cost to the firm.18. If current output is less than the profit-maximizing output, then the next unitproduceda.will decrease profit.b.will increase cost more than it increases revenue.c.will increase revenue more than it increases cost.d.will increase revenue without increasing cost.e.may or may not increase profit.19. If a graph of a perfectly competitive firm shows that the MR = MC point occurswhere MR is above AVC but below ATC,a.the firm is earning negative profit, and will shut down rather thanproduce that level of output.b.the firm is earning negative profit, but will continue to produce whereMR = MC in the short run.c.the firm is still earning positive profit, as long as variable costs arecovered.d.the firm is covering explicit, but not implicit, costs.e.the firm can cover all of fixed costs but only a portion of variable costs.20.When the price faced by a competitive firm was $5, the firm produced nothingin the short run. However, when the price rose to $10, the firm produced 100 tons of output. From this we can infer thata.the firm's marginal cost curve must be flat.b.the firm's marginal costs of production never fall below $5.c.the firm's average cost of production was less than $10.d.the firm's total cost of producing 100 tons is less than $1000.e.the minimum value of the firm's average variable cost lies between $5and $10.Part B: Problems (20 marks - Answer BOTH questions)1. (10 marks)Mark derives utility from attending rock concerts (R) and fromcolas (C) as follows:U(C,R) = C 0.9R 0.1.The marginal utility of cola (MU C) and the marginal utility of rock concerts(MU R) are given as follows:MU C = 0.9C −0.1R 0.1 ,MU R = 0.1C 0.9R−0.9 ,withMRS = MU C/ MU R = 9R / C.a.If the price of cola (P C) is $1 and the price of concert tickets (P R)is $30 and Natasha's income is $300, how many colas and ticketsshould Natasha buy to maximize utility? (4 marks)b.Suppose that the promoters of rock concerts require each fan tobuy 4 tickets or none at all. Under this constraint and given theprices and income in (a), how many colas and tickets shouldNatasha buy to maximize utility? (4 marks)c.Is Natasha better off under the conditions in (a) or (b)? Explainyour answer. (2 marks)2.(10 marks)Consider a competitive market made up of a large number ofidentical firms. The market demand curve for the product is:Q = 1,000 – 50P,where P is price and Q is quantity. The market supply is expressed as:Q = 200P– 1,000.A typical firm in the industry has a marginal cost function as follows:MC = 5 + 0.5Q.a.Determine the market equilibrium price and quantity for theindustry. (2 marks)b.Determine each firm’s ou tput level and the number of firms in theindustry. (2 marks)c.Suppose that the government imposes a tax of $1 per unit ofoutput produced by firms. Compute the new equilibrium price inthe market after the tax is imposed. (3 marks)d.Suppose that the price in (a) represented a long-run equilibrium inthe market. Does the new equilibrium (c) represent a long-runequilibrium? What adjustments, if any, will occur in the industry?Explain. (3 marks)***** END OF TEST ******。

ECON6002_Macroeconomic Analysis_2010 Semester 1_final review part 1

Revision Questions for Final ExaminationMacroeconomic Analysis(ECON6002)Semester1,2010This practice examination comprises three(3)questions,all of equal value.1.[20marks]Consider a closed economy in which the representative e¤ective con-sumer/worker maximisesU=Z10e t c1 t1 dt(1)where c refers to private consumption expenditure per e¤ective workerand = n (1 )g,where is the household’s discount rate,andg is the rate of technological progress.The equation of motion for kand c are,respectively:_k=f(k) c (n+g)k(2)_c c =1[r ( + g)](3)Consider an economy that is on its balanced growth path.At time0,the government unexpectedly starts to tax investment income at rate(where0< <1)so that the real interest rate facing the household isnow given by r=(1 )f0(k).Assume that the government returnsthe revenue it collects from this tax through lump-sum transfers.(a)[8marks]Plot the_k=0and_c=0curves in(c;k)space.How does the tax shift the_c=0curve?(b)[5marks]How does c respond to the introduction of the tax at time0?What happens to c and k after time0?(c)[2marks]How do the balanced growth values of c and k change?(d)[5marks]Does your answer to(c)imply that a policy of subsidising invest-ment(i.e.making <0)and raising revenue from this subsidythrough lump sum taxes,increases welfare?Why or why not?12.[20marks]OLG model Suppose,as in the standard overlapping generations (OLG)model,that L t two-period-lived households are born in period tand that L t=(1+n)L t 1.Let the utility of an household agent(agenthereafter)born in period t be given by:U t=ln C1t+1(1+ )ln C2t+1;1(1+ )2(0;1)(4)where C1t and C2t+1denote the amounts of consumption of the gen-eration t agent in the two periods of their life.The agents have oneunit of labor in the…rst period their life.The agents have to save apart of their wage income in the form of capital to be able to consumein the second period of their life.Let the competitive wage rate andthe rental rate of capital be denoted by W t and R t respectively.Eachunit of savings at time t yields r t+1units of output in time t+1,wherer t+1=1+R t+1is the gross interest rate.The production function ofthe economy is given byY t=K t L1t(5)where0< <1and K t is the amount of capital brought into periodt by the individuals born in period t 1.(a)[4marks]Solve the utility maximization problem of an household agent born in period t.What is the savings rate of the agent?(b)[4marks]Derive an equation for the evolution of the capital stock of the economy.Solve for the steady-state capital labor ratio of the econ-omy.(c)[4marks]How would an increase in population growth rate(n)a¤ect the steady state of the economy?(d)[4marks]Suppose the economy is in a steady state.The government decides to impose a social security tax( y)on every agent in the…rstperiod of their life.The government also promises to transfer thetax revenue equally among all agents in the second period of theirlife.What will be the e¤ect of this tax policy on savings?(e)[4marks]Does this policy improve utility of all individuals in the econ-omy?Why or Why not?Under what conditions can this policybe justi…ed?23.[20marks]RBC Model Consider an economy with a constant population of in…nitely lived household.The representative household is endowedwith K0units of capital at t=0and L units of labor at each point intime.The representative household maximizes expected lifetime utilitygiven by:U t=E01P t=01(1+ )t ln C t+b ln L L t ;11+ 2(0;1)(6)where C t and L L t are consumption and leisure in period t. >0denotes the importance given to leisure in the household’s welfare.Theaggregate production function at time t is given byY t=K t;(u t L t)1 ; 2(0;1)(7) where L t is the amount of labor supplied in period t and u t is a randomproductivity shock.Given100%depreciation rate on physical capital,the household budget constraint isK t+1=W t L t+(1+r t)K t C t(8) which implies K t+1=Y t C t,given clearing of competitive markets.(a)[2marks]What is the wage rate and rental rate of capital in period t,W tand(1+r t),respectively?(b)[5marks]The Euler condition relating C t and the expectation of C t+1is1 C t =1(1+ )E t (1+r t+1)C t+1 (9)Conjecture that optimal consumption takes the form C t=(1 s t)Y t. Given this guess and(9),show that the constant savings rate iss=(1+ )(10)(c)[5marks]Given the condition relating optimal leisure and consumption:C tL L t =W t b(11) show that labor supply,L t,is constant.Speci…cally,L t=L= (1 )b(1 =(1+ ))+(1 ) L(12)3(d)[2marks]Use your answers to (b)and (c)to deriveC t = 1 (1+ ) K t u 1 t L 1 (13)K t +1= (1+ )K t u 1 t L 1 (14)(e)[6marks]Suppose the economy is at the non stochastic steady state.Whatwill be the e¤ect of a one time positive shock to u t on the path ofoutput?4Answer to1.a.The k isocline is una¤ected because tax revenue is rebated.Substitutingfor r=(1 )f0(k),the household budget constraint,in per e¤ective worker terms,is,before and after the capital income tax,respectively: _k=w+f0(k)k c (n+g)k=0_k=w+(1 )f0(k)k+ f0(k)k c (n+g)k=0Either budget constraint implies_k=f(k) c (n+g)k.Substituting for r=(1 )f0(k),the c isocline,before and after the capital income tax,is_c c =1[f0(k) ( + g)]=0_c c =1[(1 )f0(k) ( + g)]=0The c isocline is now vertical at(1 )f0(k)=( + g).The real after tax return on capital,(1 )f0(k),is lower.To equate the LHS with the RHS,a lower k yields a higher pre tax return,f0(k).The c isocline shifts left.b.At time0,k is predetermined by_k=f(k) c (n+g)k.c jumps up tothe new saddlepath.The unexpected lower return on capital induces households to consume more,save less.From time0onwards,there is dissavings and decumulation of k.Along the saddlepath,in transition to new balanced growth path k and c are falling.c.Lower c and k.d.No.The original market outcome is already chosen by a central plannerattempting to maximise lifetime utility of a representative household subject to capital accumulation equation.This gives the representative household the highest possible lifetime utility.A subsidy would yield the opposite result to that in b.and c.-that is,initial drop in c and higher c in the new equilibrium.However,the utility loss from the short term sacri…ce exceeds the present value of utility gained in the long run.This is the same type of argument used to explain why households in the Ramsey model do not choose to consume the golden rule level.5。

ECON5002_Macroeconomic Theory_2010 Semester Summer_Macro Introduction 2010

• Provided a quiz is still ‘on’ and not yet submitted, you can correct any saved answer • Immediate feedback with quiz answers
• Computer unavailability not an acceptable excuse
•
Supplementary Final Exams
Missed Mid-Semester Test and Final Exam
•
• •
Must be granted Special Consideration
Supplementary exam to be arranged by co-ordinator on a date to be decided For confirmation, check Blackboard (Sorry, no personal notification)
Textbook and Study Material
Prescribed Text:
Blanchard, O. and Sheen, J. (2009) Macroeconomics, Third Australasian edition, Pearson. Available from Co-op Bookshops
• 90 minutes in duration (including reading time)
• Scheduled for Thursday, 28 January 2009

• Venue: Peter Nicol Russell Tutorial Rm. 315

ECON6002_Macroeconomic Analysis_2010 Semester 1_Lecture 11 part 1

(DR 11.2, 11.3)
1 2 3 4
De…nition Taxes and Bonds in the Ramsey model Taxes and Bonds in the OLG model Intuition and Implications
(ECON6002)
Ricardian Equivalence
views government debt (bond issue to household) as delayed taxation
will simply save the bond and use bond plus interest to pay taxes government will levy to retire the bond.
(ECON6002)
Ricardian Equivalence
May 24, 2008
10 / 10
May 24, 2008 7 / 10
Ricardian Equivalence
3.3 Equation of motion for k
Total savings of the young is held in capital and bonds: Kt +1 + Bt +1 = St Lt where St = 1 [ wt 2+ρ Tt ] (4)
(6)
8 / 10
Ricardian Equivalence
3.4 Switch from tax to bond …nancing
Government could decrease tax in the current period (Tt ) and borrow by issuing more bonds (bt +1 ) Although this means higher taxes in the next period, taxes to repay bonds are levied on future young. So, a switch from tax to bond …nancing has real e¤ects. RICARDIAN EQUIVALENCE DOES NOT HOLD.

巴德宏观经济学原理(英文版第8版)学生课件Econ_Ch10

Copyright © 2018, 2015, 2013 Pearson Education, Inc. All Rights Reserved
26.1 Financial Institutions and Markets
(4 of 13)
During 2016, the value of Tom’s machines fell by $20,000, depreciation. During 2016, Tom’s spent $30,000 on new machines—gross investment. Tom’s net investment was $10,000, so at the end of 2014,Tom had capital valued at $40,000.
Copyright © 2018, 2015, 2013 Pearson Education, Inc. All Rights Reserved
26.1 Financial Institutions and Markets
(5 of 13) Wealth is the value of all the things that a person owns. Saving is the amount of income that is not paid in taxes or spent on consumption goods and services; saving adds to wealth.
Copyright © 2018, 2015, 2013 Pearson Education, Inc. All Rights Reserved
26.1 Financial Institutions and Markets

econ2003-08

5
ECON2003W1
U John(b, w) = (bJohn + 1) ∗ wJohn
U Mary(b, w) = bMary ∗ wMary
(a) Draw the Edgeworth box that represents this little economy (put bread
on the horizontal axis and water on the vertical).
University approved tors may be used
A foreign language translation dictionary is permitted provided it contains no notes, additions or annotations.
U (wF , wC) = wF2/3wC1/3?
ANSWER: 10 units of the French wine and 25 units of the California wine.
2. (10 points) Suppose that the consumer has an endowment of 6 units of
(a) Explain whether Peter is risk averse, risk neutral or risk loving.
RISK NEUTRAL. LINEAR UTILITY FUNCTION. THE UTILITY OF THE EXPECTED VALUE IS EQUAL TO THE EXPECTED UTILITY
of x and 4 units of y.
(a) Draw the Edgeworth box.

ECON6002_Macroeconomic Analysis_2010 Semester 1_Problem set 5 feedback

3
Problem Set 5: Ramsey Model
ECON6002, Semester 1,2010
Feedback
1. Consider a closed economy in which the representative e¤ective consumer/worker maximises Z 1 c1 e t t dt U= (1) 1 0 where c refers to private consumption expenditure per e¤ective worker. Labour is supplied inelastically. In the same manner as in Romer’ s text, appears because of the transformation from a household utility maximising problem to that shown above, where variables are in e¤ective worker terms; = n (1 )g , where is the household’ s discount rate, and g is the rate of technological progress. For simplicity, the depreciation rate on physical capital is zero. There is no government in this economy. Ans a: Write down the budget constraint faced by the household at time t and justify the equation of motion for k , capital per e¤ective worker. The representative household: supplies 1 unit of labor at every t (inelastic labor supply) holds the only asset, physical capital takes the paths of r and w as given has perfect foresight and faces the Budget Constraint: _ = W L + rK CL + K _ = (W C )L + rK K (2a) (2b)

泰国商会大学经济学硕士MIBE

Master of Economics Program in International Business Economics(International Program)Revised Edition, Year 2012University name:University of the Thai Chamber of CommerceCampus/School: School of EconomicsPart 1 General Information1.Curriculum TitleThai หลักสูตรเศรษฐศาสตรมหาบัณฑิต สาขาวิชาเศรษฐศาสตร์ธรกิจระหว่างประเทศ (หลักสูตรนานาชาติ)English Master of Economics Program in International Business Economics(International Program)2.Degree Title2.1 Full Title (Thai) เศรษฐศาสตรมหาบัณฑิต (เศรษฐศาสตร์ธรกิจระหว่างประเทศ)2.2 Abbreviation (Thai) ศ.ม. (เศรษฐศาสตร์ธรกิจระหว่างประเทศ)2.3 Full Title (English) Master of Economics (International Business Economics)2.4Abbreviation (English) M.Econ. (International Business Economics)3. SpecializationsGraduates specialize in international business economics research.4. Total credits for the curriculum36 credits5. Types of the curriculum5.1 FormMaster degree 1 year curriculum with plan A (Thesis plan) and plan B (Non-Thesis plan)5.2Language of instructionEnglish language is used for instruction, documents and textbooks are in English.5.3AdmissionsThais or other nations can apply the program.5.4Co-curriculum AgreementsNo.5.5Degree awardOnly one discipline is awarded.6.Faculties responsible for the curriculum7.Teaching InstitutionUniversity of the Thai Chamber of CommercePart 2 Academic system, program management and program structure1. Academic system1.1 SystemTwo semesters system for each regular academic year.1.2 Summer SessionThere are courses offering in summer session.1.3 Credits comparable to the regular semestersNone2.Program management2.1 Date – Time to operate teaching and studyingFirst semester: August – DecemberSecond semester: January – MaySummer session: June – July2.2 Applicants Qualification1)Holding a Bachelor’s degree from an institution which is accredited by the Office ofHigher Education Commission or the Office of Civil Service Commission, and2)Having at least one year of working experience after holding a Bachelor’s Degree.3)In case of having no working experience, the GPA must be at least 2.5.4)No serious contagious diseaseIn case an applicant’s academic qualifications do not meet the above requirements, theapplication may be reviewed and approved by the Committee of the Graduate School.2.3 Academic SystemAcademic system is classroom type as stated in the regulations of University of the Thai Chamber of Commerce entitled of graduate studies, year 2010 (Appendix A).2.4 Transfer AdmissionCredit Transfer rules refer to the regulations of Office of the Higher Education Commission entitled of credit transfer admission in 2545 and the regulations of University of the Thai Chamber of Commerce entitled of graduate studies, year 2010 (Appexdix A).3.Curriculum and Lecturers3.1. Curriculum3.1.1 Total credits36credits3.1.2 Curriculum structurePlan A (Thesis)1) Core Courses 24 credits∙Economics and Methodology Courses (15 credits)∙Business Courses (9 credits)2) Thesis 12 creditsTotal 36 credits Plan B (Non-Thesis)1) Core Courses 24 credits∙Economics and Methodology Courses (15 credits)∙Business Courses (9 credits)2) Elective Courses 6 credits3) Independent study 6 credits4) Comprehensive ExaminationTotal 36 credits3.1.3 List of Courses3.1.3.1 Code DescriptionFirst Letter “E”= Abbreviation of the ProgramSecond Letter =Required Courses and Elective Courses“I”= Economics and Methodology Courses“B”= Business CoursesFirst Digit5= Graduate LevelSecond and Third Digits = Course Number (01-99)01-09 = Remedial Courses11-29 = Required Courses31-89 = Elective Courses91-99 = Thesis and Independent study3.1.3.2 Courses1) Remedial Courses (Non-Credit)Code Course Name Credits(Lecture-Practice-Self study) EI 501 Principles of Economics –EI 502 English for Economists –2) Required CoursesEconomics and Methodology Courses (15 Credits)Code Course Name Credits(Lecture-Practice-Self study) EI 521 Microeconomics for Business Decisions 3 (3–0–6) EI 522 Macroeconomics for Business Decisions 3 (3–0–6) EI 523 Business and Financial Econometrics 3 (3–0–6) EI 524 Research Methods for Business Economics 3 (3–0–6) EI 525 International Trade Theory and Policy 3 (3–0–6) Business Courses (9 Credits)Code Course Name Credits(Lecture-Practice-Self study) EB 526 Risk Management for International Business 3 (3–0–6) EB 527 International Marketing Analysis 3 (3–0–6) EB 528 Marketing Research for Business Economics 3 (3–0–6)3) Elective Courses (6 Credits)Code Course Name Credits(Lecture-Practice-Self study) EB 575 International Law in Business and Economics 3 (3–0–6) EI 531 Seminar in Business Economics 3 (3–0–6) EI 532 Government Policies and Business Economics 3 (3–0–6) EI 533 Industrial Organization 3 (3–0–6) EI 534 Game Theory 3 (3–0–6) EI 535 Economics of Risk Analysis 3 (3–0–6) EI 536 Feasibility Analysis of Investment 3 (3–0–6) EI 537 Transportation Economics 3 (3–0–6) EI 538 Applied Economics for Economic and Business Decisions 3 (3–0–6) EI 539 Business Forecasting 3 (3–0–6)4) Thesis and Independent StudyCode Course Name Credits(Lecture-Practice-Self study) EI 591 Thesis 12 (0–0–36) EI 596 Independent Study 6 (0–0–18)3.1.4 Study PlanPlan A (Thesis)Plan B (Non-Thesis)3.1.5Course Description1) Remedial CoursesEI 501 Principles of Economics ‒Basic concepts of microeconomics and macroeconomics theories: opportunity cost, production possibility curve, laws of demand and supply, price determination, national income, gross domestic product, gross national product, inflation rate, consumption, saving, investment, government expenditure, export, and import.EI 502 English for Economists ‒Development of English reading, writing, and speaking skills via case studies from news, articles, and class discussion about economic and business situations.2) Required CoursesEconomics and Methodology CoursesEI 521 Microeconomics for Business Decisions 3 (3-0-6) Consumer behavior, production, cost of production, application of demand and supply, perfectly competitive markets, monopoly markets, oligopoly markets, monopolistic competition markets, factor markets, forecasting demand, decisions under risk and uncertainty, and application of microeconomics theories to business decisions.EI 522 Macroeconomics for Business Decisions 3 (3-0-6) Study of macroeconomic variables: national income, output, inflation, unemployment, balance of payment, exchange rate, and the effects of monetary and fiscal policies on the macroeconomic variables, and application of macroeconomics theories to business decisions.EI 523 Business and Financial Econometrics 3 (3-0-6) Simple and multiple regression analysis, ordinary least square method, assumptions of classical linear regression, regression with dummy variables, multicollinearity, heteroscedasticity, autocorrelation, and application of econometrics to business decisions.EI 524 Research Methods for Business Economics 3 (3-0-6) Research problems formulation, literature reviews, data collection, primary and secondary data, sources of secondary data in business and economics, using library databases, hypothesis formulation, qualitative and quantitative research methods, and writing research proposals in economics and business.EI 525 International Trade Theory and Policy 3 (3-0-6) Theories of international trade, exchange rate determination theories, international capital movement, foreign direct investment, balance of trade, international trade policies, tariffs, and regional economic integration.Business CoursesEB 526 Risk Management for International Business 3 (3-0-6) Market risk, credit risk, operational risk, risk management, risk evaluation, risk protection for international business, and financial institutions services in risk protection.EB 527 International Marketing Analysis 3 (3-0-6) Principles of international marketing, market position and market segment, international marketing strategies, export and import procedures, and analysis of problems affecting international marketing.EB 528 Marketing Research for Business Economics 3 (3-0-6) Marketing research, research design, questionnaire design, attitude measurement, psychological measurement, sampling procedures, sample size, data collection, and data analysis and interpretation for marketing.3) Elective CoursesEB 575 International Law in Business and Economics 3 (3-0-6) Features and scope of international economic law, including principles and provisions of agreements of international economic organizations.EI 531 Seminar in Business Economics 3 (3-0-6) Special topics related to business economics, which vary from year to year depending on current economic and business situations.EI 532 Government Policies and Business Economics 3 (3-0-6) Current government policies affecting business decisions, analysis of economic aspects of current public policies and direction of business enterprises.EI 533 Industrial Organization 3 (3-0-6) Analysis of industrial organizations, firms behavior in imperfect competitive markets, price discrimination, market power measurement, industry concentration measurement, strategic interaction among firms, and the role of government policy in industries.EI 534 Game Theory 3 (3-0-6) Game theories which enable students with a foundation to apply game-theory analysis, both formally and intuitively, to negotiation and bargaining situations, recognize and assess archetypal strategic situations in complicated negotiation settings, and to feel comfortable in the process of negotiation.EI 535 Economics of Risk Analysis 3 (3-0-6) Economics of risk, expected utility hypothesis, individual decision making under risk, individual decision making under uncertainty, and application of risk theory to business decisions.EI 536 Feasibility Analysis of Investment 3 (3-0-6) Application of economic theory to measure the benefits and costs of projects. Study the theory and measurement of the economic opportunity cost and benefit of public projects and business projects.EI 537 Transportation Economics 3 (3-0-6) Economic analysis of intercity transportation, transportation cost measurement, applications of pricing principles, project evaluation, economic regulation, and government policies toward transportation.EI 538 Applied Economics for Economic and Business Decisions 3 (3-0-6) Application of microeconomic and macroeconomic theories and econometric tools to analyze current problems in economics and business.EI 539 Business Forecasting 3 (3-0-6) Application of time series models from both univariate and multivariate analysis to forecast economic and business variables such as interest, exchange rate, price, sales, and stock.4) Thesis and Independent Study CoursesEI 591 Thesis 12 (0-0-36) Students who have chosen plan A (Thesis) must write and defend their thesis. Topics must be in student’s area of expertise and approved by advisors. The completed thesis must be approved by the appointed thesis committee.EI 596 Independent Study 6 (0-0-18) Students who have chosen plan B (Non-Thesis) must report their independent study based in their area of expertise to their advisors, and must be approved from the appointed examination committee。

Macroeconomics宏经计算题

1
A C T I V E L E A R N I N G 2: Answers
2004 (base yr) 2005
2006
P
QPQ
P
Q
good A $30 900 $31 1,000 $36 1050 good B $100 192 $102 200 $100 205
A. Compute nominal GDP in 2004.
▪ Find public saving, taxes, private saving,
national saving, and investment.
12
A C T I V E L E A R N I N G 1: Answers
Given: Y = 10.0, C = 6.5, G = 2.0, G – T = 0.3
13
A C T I V E L E A R N I N G 1B: Exercise
▪ Now suppose the government cuts taxes by
$200 billion.
▪ In each of the following two scenarios,
determine what happens to public saving, private saving, national saving, and investment.
Public saving = T – G = – 0.3 Taxes: T = G – 0.3 = 1.7 Private saving = Y – T – C = 10 – 1.7 – 6.5 = 1.8 National saving = Y – C – G = 10 – 6.5 – 2 = 1.5 Investment = national saving = 1.5

Macroeconomics宏观经济学

Macroeconomics----------------------------------------------------------------------------------------------------------------------Part I IntroductionChapter 1 The Science of Macroeconomics【Mainpoints】1.Exogenous Variables and Endogenous VariablesExample: The total quantity and price level of pizza in a country.Exogenous variables are given in a model. [aggregate income, price of materials]Endogenous variables are what a model explains. [price level and total quantity of pizza]2.Flexible Price and Sticky PriceFlexible price: easy to adjust, in short run.Sticky price: hard to adjust, in long run.===========================================Chapter 2 The Data of Macroeconomics【Mainpoints】1.GDP(1) Real GDP and Nominal GDP, GDP deflator(2) economy's income = economy's expenditure(3) GDP = C + G + I + NX2.CPI(1) CPI measures the price of a basket of goods(2) CPI = ∑P m Q / ∑P n Q(3) difference between GDP deflator and CPI3. The Unemployment Rate(1) Labour Force = Number of Unemployment + Number of Employment(2) Unemployment Rate = Number of Unemployment / Labour Force × 100%---------------------------------------------------------------------------------------------------------------------- Part II Classical Theory: The Economy in the Long Run ---- Flexible Price Chapter 3 National Income: Where It Comes From and Where It Goes【Mainpoints】1.Total Production(1) Production Function: Y = F(L,K)(2) constant returns to scale: zY = zF(L,K)2. National Income Distribution(1) Factor Prices ---- Labour:MPL = F(L+1,K) - F(L,K)ΔProfit = ΔRevenue - ΔCost = MPL×P - WIn order to maximize profit, make ΔProfit = 0. So MPL=W/P, Real WageLabour Income = MPL×L(2) Factor Prices ---- CapitalMPK = F(L,K+1) - F(L,K)ΔProfit = ΔRevenue - ΔCost = MPK×P - RIn ordet to maximize profit, make ΔProfit= 0 . So MPK=R/P, Real Rental Price ofCapitalCapital Income = MPK×K3)The Cobb-Douglas Production FunctionLabour Income = MPL×L = (1-α)YCapital Income = MPK×K = αY→F(K,L) = AKαL(1-α) , A measures the productivity of the available technology3.Total Demand1)Consumption:Determined by disposable incomeC=C(Y-T)Marginal Propensity to ConsumeMPC=C(Y-T+1)-C(Y-T)2)Investment:Determined by interest rateI=I(r)When r is high, investors will give upinvestment because cost of loan is higherthan rate of return.3) Government PurchasesG vs T, measures government budget5. Equilibrium (in a closed economy)(1) Market of Goods and ServicesY=C(Y-T)+I(r)+G(2) Market of Loanable FundsS=Y-C(Y-T) - G = I(r)investment is crowded out ===========================================Chapter 4 Money and Inflation【Mainpoints】1.Concept of Money(1) Funtions of Money: 1) Store of Value. Example: You can hold your money and trade itfor goods and services at some time in the future.2) Unit of Account. Example: In store people use money to showprice.3) Medium of Exchage. Example: People use money as tool toexchange goods.(2) Types of Money: 1) Fiat Money. No value, example: Paper Money.2) Commodity Money. With value, example: Gold and Silver.(3) Control of Money: 1) Institution: Central Bank. Example: Deutsche Bundesbank2) Method: Open-Markt Operation. Example: Buy governmentbonds to increase money supply.2.The Quantity Theory of Money(1) Quantity Equation: MV=PT →MV=PYQuantity Theory of Money: MV=PY(2) Real Money Balances: M/P , measured in quantity of goods and services.The Money Demand Function: (M/P)d = L(Y,i) = M/P← Money Supply. Y↑, d↑; i↑,d↓(3) Money and Inflation: ΔM% + ΔV% = ΔP% + ΔY% So M↑, P↑3.Inflation and Interest Rate(1) Fisher Equation: i = r + π===========================================Chapter 5 The Open Economy【Mainpoints】1.International Trade in a Samll Open Economy(1) View of goods and capital flow: NX = Y- (C+G+I)(2) View of capital flow: NX = Y-C-G-I = S-I= S-I(r*)r* is World Interes Rate(3) Trade Policies: 1) Domestic Fiscal Policy, influenceG↑,T↓→S↓→NX↓2) Fiscal Policy Abroad, influenceG e↑, T e↓→S e↓→r*↑→NX↑3) Shift in investment demand. Example: Government provides aninvestment tax credit2.Exchange Rates(1) Nominal Exchange Rates(e) and Real Exchange Rates(ε)Nominal exchange rates are measured in currency. Example: 100 yen / 1 dollarReal exchage rates are measured in goods and services. Example: 2 Japan Car / 1 USA car ε = e × (P/P*) , P* means price level of foreign countries.(2) The Real Exchange Rates and Trade Balance:NX = NX(ε)ε↓, P/P*↓, means domestic goods and servicesare cheaper than abroad. NX↑When NX(ε) = S - I, ε is equilibrium real ex.rate.(3) Trade Policies: 1) Domestic Fiscal Policy:G↑,T↓ → S↓(Expansionary Fiscal Policy)2) Fiscal Policy Abroad:G e↑, T e↓→S e↓→r*↑→I↓3) Shift in investment demand.4) Shift in NX(ε) Example: Protectionist Trade Policies(4) Inflation and nominal exchange rates:e = ε × (P*/P) → Δe%= Δε% + (π* - π)(5) PPP(Purchasing-Power Parity): 1 Dollar can buy the same quantity of wheat in anycountry.===========================================Chapter 6 Unemployment【Mainpoints】1.Natual Rate of Unemployment(1) Concept: The rate of unemployment which the economy get closed to in the long run.(2) Calculation: L-Labour Froce, E-Number of Employed, U-Number of Unemployed, f-rate of job fiding, s-rate of job seperating.L=E+U, fU=sE → U/L=1/(1+f/s)2.Causes for Unemployment(1) Frictional Unemployment:Unemployed people need time to find jobs.e.g. sectoral shift, unemploymetn insurance.(2) Structural Unemployment:Wage Rigidity. Wage is above the equlibrium level.e.g. Minimum-Wage Laws, Unions, Efficiency Wages.---------------------------------------------------------------------------------------------------------------------- Part III Growth Theory: The Economy in the Very Long Run ---- Solow Growth Model Chapter 7 Economic Growth I: Capital Accumulation and Population GrowthAssumption: Constant Return to Scale【Mainpoints】1.Capital Accumulation(1) Production Function per worker: zY=F(zK,zL)→Y/L=F(K/L,1)→y=f(k),MPK=f(k+1)-f(k)(2) Output and consumption per worker: y=c+i→c=(1-s)y→i=sy→i=sf(k)(3) The Steady State: Capital stock growth Δk = 0Δk=i-δk, δ is depreciation rate→Δk=sf(k)-δk=0→sf(k*)=δk*(4)Golden Rule level of capital: k*gold which maximizes cc=y-i→c=f(k)-sf(k)→c*=f(k*)-δk*→c max:MPK=δ2. Population Growth(at rate of n)(1) The Steady State:Δk=i-k(δ+n)→Δk=sf(k)-k(δ+n)=0→sf(k*)=(δ+n)k*(2) Golden Rule level of capital:k*gold, c=y-i→c max:MPK=δ+nChapter 8 Economic Growth I: Technology, Empirics, and Policy1.Technological Progress in the Solow ModelAssumption: Technology growth is a given exogenous variable g(1) Efficiency of Labour: Y=F(K,EL)(2) The Steady State: Δk=sf(k)-(g+n+δ)k=0→sf(k*)=(g+n+δ)k*(3) Golden Rule level of capital: k*gold , c=y-i→MPK=g+n+δ2.Endogenous Growth TheoryAssupmtion: Technolgy growth is a endogenous function g(μ), capital includes knowledge (1) 2 Sector Model: Y=F[K,(1-μ)EL], ΔE=g(μ)E, ΔK=sY-δK---------------------------------------------------------------------------------------------------------------------- Part IV Business Cycle Theory: The Economy in the Short Run ---- Sticky Price Chapter 9 Introduction to Economic Fluctuations【Key Concepts】Recession: A period of falling output and rising unemployment.Business Cycle: Short-run fluctuations in output and employment.【Mainpoints】1.GDP and unemployment(1) Okun's Law: ΔReal GDP%=3%-2×ΔUnemployment Rate(2) Leading Economic Indicators: Forecasts. Example: Average work time, Index of stock prices, Money Supply....2.Aggregate Demand and Aggregate Supply( P=P(Y))(1) The Quantity Theory of Money→AD: MV=PY→M/P=(M/P)d=kY(2) AS: SRAS---P=P, LRAS---Y=Y(3) From Short Run to Long Run: M changes AD, Y is unchanged inthe long run, but P in the long run changes. (A→B→C)(4) Shocks to AD and AP:1) Shocks to AD. Example: Credit Card makes V rise.Policy: Reduce the Money Supply.2) Shocks to AP. Example: A drought that destroys crops. Cartel. Union. etc. P↑Policy: Wait! Then price returns original level eventually(But it takes longtime). Or expand AD(But price level will be high in long period of time).===========================================Chapter 10 Aggregate Demand I: Building the IS-LM Model (Y-r)【Mainpoints】1.IS Curve(1) Good and Service Market→The Keynesian Cross: Y=C+I+G, PE=AE(2) IS curve:Y=C(Y-T)+I(r)+G 1) r↑→I↓→Y↓ 2) Fiscal Policy: G↑→Y↑→IS→, Governmetn-purchases multiplier, tax multiplier.2.LM Curve(1) Money Market→The Theory of Liquidity Peference: M/ P=L(r), M s=M d(2) LM Curve: M/P=L(r,Y). 1) Y↑,M d↑, r↑ 2)M s↑,r↓,LM←3. The Short-Run Equilibrium=========================================== Chapter 11 Aggregate Demand II: Applying the IS-LM Model (Y-P) 【Mainpoints】1.IS-LM Model as a Theroy of Aggregate Demand(1) Derivation: P↑,(M/P)s↓,r↑,LM↑→Y↓(2) Shift in AD: G,T,M→IS/LM→Y(3) In long run and short run: In long run Y<Y===========================================Chapter 12 The Open Economy Revisited: The Mundell-Fleming Model and the Exchange Rate Regime【Mainpoints】1.Mundell-Fleming Model(1) IS* Curve: Y=C(Y-T)+I(r*)+G+NX(ε) (2) LM* Curve: M/P=L(r*,Y)2.Under Floating Exchange Rates(1)Fiscal Policy:Shift IS*,ineffectual; Monetary Policy:Shift LM*; Trade Policy:Shift NX(ε)→IS* 3.Under Fixed Exchange Rates(1) Theory: Arbitrageur arbitrage so that M changes.(2)Fiscal Policy shifts IS*→LM*; Monetary Policy:Shift LM*, ineffectual; Trade Policy: ShiftNX(ε)→IS*→LM*4. Policy Choice: Impossible Trinity5. Mundell-Fleming Model in Short andLong RunChapter 13 AS and the Short-Run Tradeoff Between Inflation and Unemployment1.Aggregate Supply ModelY=Y+α(P-P e)2.Inflation, Unemployment and Phillips Curve(1)Y=Y+α(P-P e)→P-P-1=P e-P-1+1/α(Y-Y)+v→π=πe+β(μ-μn)+v [Okun's Law] v-supply shock(2) Sacrifice Ratio: π↓1%, GDP ↓ ? %----------------------------------------------------------------------------------------------------------------------Part V Macroeconomic Policy DebateChapter 14 Stabilization Policy1.Inside Lag and Outside Lag(1) Inside lag is the time between economy shock and the policy anction responds. Example: Policy makers need time to recognize a shock and react.(2) Outside lag is the time between a policy action and its influence on the economy. Example: Change in money supply and interest rate.===========================================Chapter 15 Government Debt and Budget Deficits1.The Traditional View of Government Debt(1) In the short run, T↓,C↑,S↓,r↑,I↓,lower steady-state K and a lower level of Y.(2) In the lo ng run, T↓,C↑,IS→,AD↑, finally Y=Y, P is higher.(3) In open economy, T↓,C↑,IS→, ε↑2.The Ricardian View of Government Debt(1) Ricardian Equivalence: Consumers are forward-looking.They think that government will raise tax at some point in the future, in order to afford budget. So they won't change consumption. --------------------------------------------------------------------------------------------------------------------- Part VI More on the Microeconomics Behind MacroeconomicsChapter 18 Money Supply, Money Demand and the Banking System1.Money Supply(1) Money Supply (M) = Currency (C) + Demand Deposits (D)(2) Reserves: The money that bank receive but don't lend out. Reserve-deposit ratio-rr1) 100% Reserve Banking. 1C→1D, M remains constant.2) Fractional-Reserve Banking. 1C→rrD+(1-rr)C, M increases. And (1-rr)C can be put into another bank, the process of money creation can be continued.(3) Money Supply Model: M=C+D.B(Monetary Base)=C+R [Control by Central Bank]→ M=(cr+1)/(cr+rr)×B=m×B [cr is currency-deposit ratio](4) Monetary Policy Tool: open-market operation, reserve requirements, discout rate[the rate that banks borrow from central bank].2.Money Demand(1) Quantity Theory: (M/P)d=L(i;Y)(2) Portfolio Theory: (M/P)d=L(r s,r b,πe,W) [r s-expected real return on stock, r b-expected real return on bonds, W-real wealth]。

国际经济与贸易专业培养方案

国际经济与贸易专业培养方案一、培养目标及要求培养目标：培养系统掌握国际贸易与跨国经营基本理论与实务技能，熟悉通行的涉外经济规则和惯例，具有解决实际问题的专业能力和较强的听说读写能力的专业人才；培养具有创新能力、实践能力，能在涉外经济贸易部门、外资企业及政府机构从事实际业务、管理的外向型复合人才；培养具有一定学术潜质，能运用专业理论与方法进行独立研究的研究型人才。

培养要求：面向市场，强化应用，以“宽口径、厚基础、重能力和综合素质培养”为基本办学思路，突出国际经济与贸易的专业特色，要求学生能够较全面、系统、准确地理解和掌握国际贸易相关的基本理论；熟悉国际贸易流程和操作；强化英语优势，要求学生能够熟练地应用英语进行国际贸易的听、说、读、写、译；同时强化社会科学、人文科学、自然科学等基础教育，使学生具有宽阔的知识视野、良好的文化素养。

二、学制与学位授予类型学制：四年学位授予类型：经济学学士（Bachelor of economics）三、主要课程教材及参考书课程名称：微观经济学Microeconomics教材：《Economics—上册，Macroeconomics》（美）斯蒂格利茨，中国人民大学出版社，2008年版参考书：1、《Microeconomics》（美）曼昆，中国人民大学出版社，2008年版2、《Microeconomics》（美）Robert.S.Pindyck，清华大学学出版社2007年版3、《Microeconomics》（美）哈伯德，机械工业出版社2007年版4 、《经济学》（美）萨缪尔森，华夏出版社2006年版5、《西方经济学》第三版，高鸿业编，中国人民大学出版社；2007年版6、《西方经济学学习与教学手册》，高鸿业编，中国人民大学出版社；2007年版7、《现代西方经济学教程》上册，魏埙主编，南开大学出版社，2005年版课程名称：宏观经济学Macroeconomics教材：《Macroeconomics》（美）曼昆，中国人民大学出版社，2008年版参考书： 1、《Economics—下册，Macroeconomics》（美）斯蒂格利茨，中国人民大学出版社，2008年版2、《Macroeconomics》（美）哈伯德，机械工业出版社2007年版3、《经济学》（美）萨缪尔森，华夏出版社2006年版4、《西方经济学》第三版，高鸿业编，中国人民大学出版社；2007年版5、《西方经济学学习与教学手册》，高鸿业编，中国人民大学出版社；2007年版6、《现代西方经济学教程》上册，魏埙主编，南开大学出版社，2005年版课程名称：管理学 Management教材：《管理学》，周三多主编，高教出版社，2000版。

经典经济学教材

经典经济学教材微观经济学:●Intermediate Microeconomics (A Modern Approach) Varian H.----------------世界永恒的经典中级微观经济学中文版上海三联上海人民出版社●Andrew Mas-colell, Michael Whinston and Jerry Green (1995): Microeconomic Theory,Oxford University Press;----------------高级微观经济学世界排名第一●Varian.Hal.R, 1992，Microeconomic Analysis. Third Edition. W.W. Norton & Company；----------------高级微观经济学世界排名第二●Jehle.G and P. Reny, Advanced Microeconomic Theory. Second Edition. Addison-Wesley.2001. 上海财经大学出版社----------------高级微观经济学比以上两本简单一点宏观经济学:●Macroeconomics (fourth edition) N. Gregory Mankiw宏观经济学(第四版) 中文版人大出版社●全球视角下的宏观经济学萨克斯拉瑞恩--------------世界上最优秀的中级宏观经济学中文版上海三联、上海人民出版社，；●David Romer，2003，advanced macroeconomics ，英文版上海财经大学出版社---------------高级宏观经济学经典教材●Blanchard & Fisher, 1989, lectures on macroeconomics, 经济科学出版社1998中译本。

----------------高级宏观经济学经典教材但是难度较大计量经济学:●Basic Econometrics Gujarati D.N.初级计量经济学----------------计量经济学经典教材翻译版人民大学出版社●计量经济学导论--------现代观点Woodtridge----------------最新美国经典中级计量经济学教材中译本，中国人民大学出版社●Econometric Methods Johnstone计量经济方法----------------经典教材(介于中级与高级之间) 翻译版中国经济出版社●Econometric Analysis (4’rd edition)Greene W.H.计量经济分析----------------计量经济学圣经(难度较大) 英文版清华大学出版社博弈论与信息经济学:●张维迎，1996年，《博弈论与信息经济学》，上海三联、上海人民出版社，；--------------------中国最好的博弈论教材●Laffont J-J and Martimor D.(2002), 《The Theory of Incentives：The Principal-AgentModel》, Princeton University Press，激励理论--------------------世界永恒的经典教材中译本，中国人民大学出版社产业组织理论:●Tirole.Jean，1988，The Thoery Of Industrial Organization，MIT Press, Cambridge, MA;--------------------世界永恒的经典教材中文本人大出版社●Laffont, J.-J., and J. Tirole (1993): A Theory of Incentives in Procurement and Regulation.MIT Press, Cambridge, MA--------------------世界永恒的经典教材中文本上海三联、上海人民出版社。

Advanced_Macroeconomics

Advanced MacroeconomicsGOALSMacroeconomics is the study of the economy as a whole. It is therefore concerned with some of the most important questions in economics.∙Why are some countries rich and others poor?∙Why do countries grow?∙What are the sources of recessions and booms?∙What are the determinants of consumption and investment?∙Why is there unemployment?∙What are the sources of inflation?Answers to such questions are the subject of this course.EVALUATIONGiven the course's format, I expect you to read in advance the material for every session. Active participation is encouraged. There will be 3 homework assignments. They will be posted on the course's website. All problem sets should be typed, yet graphs and algebra can be hand-written as long as they are clear and legible. Late assignments will not be accepted under any circumstance. There will be one midterm exam and one final exam. Final exam will be cumulative. Your final grade in the class will be determined as the following weighted average of your work throughout the semesterProblem Sets 20%Midterm Exam 30%Final Exam 50%TEXTBOOKThe main text for the course isRomer, David. Advanced Macroeconomics. McGraw Hill, 2006 (3rd edition). Supplementary readings include lecture notes, which I will distribute as we proceed, as well as journal articles and selections from other books.COURSE OUTLINEMacroeconomicsI ModernBlanchard, Olivier. “What Do We Know about Macroeconomics that Fisher and Wicksell Did Not?” Quarterly Journal of Economics, November 2000, 115(4), pp. 1375-1409.Blanchard, Olivier. “The State of Macro.” Annual Review of Economics, 2009, 1, pp. 209-228. Kydland, Finn E. “Quantitative Aggregate Economics.” American Economic Review, December 2006, 96(5), pp. 1373-83.Phelps, Edmund S. “Macroeconomics for a Modern Economy.” American Economic Review, June 2007, 97(3), pp. 543-61.Woodford, Michael. “Revolution and Evolution in Twentieth-Century Macroeconomics.” Unpublished Manuscript, 1999.II GrowthThe Solow Growth Model, Romer Ch. 1Research and Development Models, Romer Ch. 3, Part ACross-Country Income Differences, Romer Ch. 3, Part BKenny, Charles and Williams, David. “What Do We Know About Economic Growth? Or, Why Don’t We Know Very Much?” World Development, January 2001, 29(1), pp. 1-22.Romer, Paul M. “The Origins of Endogenous Growth.” Journal of Economic Perspectives, Winter 1994, 8(1), pp. 3-22.Solow, Robert M. “Perspectives on Growth Theory.” Journal of Economic Perspectives, Winter 1994, 8(1), pp. 45-54.“The Solow–Swan Model”, Barro and Sala-i Martin, Chapter 1III Real Business CyclesReal-Business Cycle Theory, Romer Ch. 4“Real Business Cycles”, Ellen R. McGrattan(The note has been prepared for The New Palgrave Dictionary of Economics, 2nd edition)Rebelo, Sergio. “Real Business Cycle Models: Past, Present and Future.” Scandinavian Journal of Economics, June 2005, 107(2), pp. 217-238.FoundationsIV MicroeconomicThe Lucas Imperfect-Information Model, Romer Ch. 6, Part ANew Keynesian Economics, Romer Ch. 6, Part BInvestmentV ConsumptionandConsumption, Romer Ch. 7Investment, Romer Ch. 8Hall, Robert E. “Stochastic Implications of the Life-Cycle Permanent Income Hypothesis: Theory and Evidence.” Journal of Political Economy, December 1978, 86(6), pp. 971-987.VI Unemployment and InflationUnemployment, Romer Ch. 9 (9.1, 9.2, 9.3)Inflation and Monetary Policy, Romer Ch. 10 (10.1, 10.2, 10.3)Gilles, Saint-Paul. “Why Are European Countries Diverging in Their Unemployment Experience?” Journal of Economic Perspectives, Autumn 2004, 18(4), pp. 49-68. Orphanides, Athanasios. “Monetary-Policy Rules and the Great Inflation.” American Economic Review, May 2002, 92(2), pp. 115-120.Good Luck!。

ECON5001_Microeconomics_2008 Semester 1_ECON 5001_Quiz 2

trying to avoidadverse selection. moral hazard.screening. signaling.Question 2whether any given car is a lemon. Ten percent (10%) of all cars are lemons.Which of the following statements is true?All of the cars sell for $1,900. Only lemons are sold for $1,900. Only lemons are sold for $1,000.Only good cars will be sold for $2,000.Question 3Regardless of market structure, all firmsconsider the actions of rivals.maximize profit by setting marginal revenue equal to marginal cost.produce a differentiated product. have the ability to set price.Question 4The table below shows the payoff matrix offered to two suspected criminals, Bonnie and Clyde. The payoffs are the years they will spend in prison. The suspected criminals are not allowed to communicate. Given the information in the payoff matrix, the Nash equilibrium is that Bonnie ____ and Clyde ____.confesses; denies confesses; confesses denies; deniesdenies; confessesQuestion 5If getting accepted into college is very difficult because of high standards ofintelligence and ability, but students learn absolutely nothing while in college, it is most likely thatthey will not be hired upon graduation.attendance sends a signal to employers regarding ability.nobody will want to go to college. a college degree is not a credible signal.Question 6The difference between the expected value of a gamble and the gamble’s certainty equivalent isthe expected utility of a sure thing. the expected payoff of a sure thing.the risk premium. a measure of risk.Question 7the winner of an auction is worse off than the losers. the winner of an auction is better off than the losers.on average the winner of an auction wins what the losers of an auction lose.the winner and loser of an auction are equally well off.Question 8repeat purchases warrantiesbuilding a reputation All of the above.Question 9game?Gelato is a dominant strategy for both firms. Yogurt is a dominant strategy for Gooi only. Yogurt is a dominant strategy for Ici only.There are no dominant strategies in the above game.Question 10choose between a high-price strategy and a low-price strategy. The Nashequilibrium in this gamedoes not exist.occurs when both firms set a low price.occurs when both firms set a high price.occurs when firm A sets a high price and firm B sets a low price.Question 11Consider the payoff matrix below. The Nash equilibrium is:Firm A charges a cheat price and Firm B charges a collude price. Firm A charges a collude price and Firm B charges a cheat price. Both firms charge a cheat price.Both firms charge a collude price.Question 12bean $80 price for Simple and a $70 price for Boring. an $80 price for Simple and a $25 price for Boring. a $35 price for Simple and a $70 price for Boring.a $35 price for Simple and a $25 price for Boring.Question 13Under which one of the following conditions would a lawyer accept a case ona contingent basis?The lawyer is risk averse. The client is risk loving.The lawyer has several cases on a contingent basis with payoffs that are not perfectly positively correlated.The lawyer is more risk averse than the client is.Question 14wealth, but there is a 50% chance that it could all be stolen. The midpoint ofthe chord that runs from zero and intersects the utility function where wealth is 100, represents Brian'srisk premium.expected utility of receiving $50 with certainty.expected utility of receiving $0 50% of the time and $100 50% ofthe time.risk neutrality.Question 15simultaneous equations and by finding the combination of Q1 and Q2 thatsatisfy both equations.the reaction curves for firms 1 and 2the market supply curve and the market demand curvethe firm's supply curve and the firm's demand curveNone of the above.Question 16requiring employees to post a bondoffering a bonus after five years of servicepaying more than the market wagepaying less than the market wageQuestion 17strategies, and the same possible outcomes as the original game, theequilibriummay be different than in the original game.must be different than in the original game.will be the same as in the original game.is the same as the noncooperative version of the original game.Question 18the same as the Cournot equilibrium price.less than the Cournot equilibrium price.greater than the Cournot equilibrium price.equal to the monopoly price.Question 19individual output can be easily measured.the quantity of the work is of much less importance than quality.both employees and employers engage in opportunistic behavior. All of the above.Question 20adverse selection. negative selection.moral hazard. lemon hazard.Question 21sealed bid auction. second-price auction.English Auction. All Pay auction.Question 22used car dealers offering a warranty on the cars sold. government regulation of the price for used cars.buyers revealing how much they want cars. all of the above.Question 23a person takes more risks that are not known to the life insurance company because he has life insurance.a person buys life insurance because he has a risky lifestyle that isnot known to the life insurance company.a person is a risk lover.pregnant women with health insurance make more doctor visits than uninsured pregnant women.Question 24principals and agents have no common interests.a principal in rational pursuit of her goals behaves in a manner toreduce the agent’s welfare.an agent in rational pursuit of her goals behaves in a manner toreduce the principal’s welfare.principals and agents work in teams to achieve a certain objective.Question 25because of which of the following?They do not realize the benefit of cooperation.Players strive to minimize their opponents' profits.Players do not understand the game and its payoffs.It is not in each player's self-interest to cooperate.Question 26The winner's curse is that:lottery winners have to pay taxes on their winnings.winners are nagged by friends and relatives for help.there is a general tendency for winners of an auction to bid toohigh.winners in one auction tend to lose in future auctions.Question 27only if the game is played an infinite number of times.if the game is played an infinite number of times, or if it is uncertainhow many times it will be played.only if the game is played a finite number of times, and that numberis known by all the players in advance.at no time; tit-for-tat is an irrational strategy in this situation.Question 28strategy A contains among its outcomes the highest possible payoffin the game.strategy A is the best response to every strategy of the otherplayer.strategy A is the best response to the best strategy of the otherplayer.every outcome under strategy A generates positive payoffs.Question 29employees may steal from the firm.workers may fake injuries to get medical awards.workers may put forth as little effort as possible on the job. workers may work too hard and cost other potential workers jobs.Question 30shirking. piece rates.adverse selection.signaling.。

佛罗里达大学市场营销本科

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佛罗里达大学
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所属学校专业名称
佛罗里达大学 - University of 所在院系 Florida
市场营销 - Marketing
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华盛顿经管学院 - 市场系本科
授予学位理学学士 BS
专业分类商业、管理与经济市场营销
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主修课程新闻传播学院广告系新闻系远程通讯系农业与生命科学学院华盛顿经管学院会计系信息系统与运营管理系市场系管理系经济系金融系工程学院农业生化工程系农业生物工程系
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理学学士 BS
每年秋季, 春季
新闻传播学院远程通讯系
$284 20 约合 18万
(人民币)
理学学士 BS
每年秋季, 春季
工程学院农业生物工程系
$284 20 约合 18万
(人民币)
理学学士 BS
每年秋季, 春季
工程学院农业生物工程系
$284 20 约合 18万
(人民币)
理学学士 BS 每年秋季, 工程学院 $284
Advanced Packaging, Society & the Environment

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Long term Unemployment in Australia 1986-2005 When the unemployment rate rises (or falls), the proportion of longterm unemployed rises (or falls) with a lag.
Participation rate = 100*10.6/16.4 = 64.4%
© 2007 Pearson Education
Unemployment rate = 100*0.54/10.6 = 5.1%
5
Macroeconomics, 2nd edition
Olivier Blanchard & Jeffrey Sheen
பைடு நூலகம்The welfare of individual workers Wages
Higher unemployment affects workers:
1 Through a decrease in hires—more difficult to find jobs. 2 Through higher layoffs—higher risk of losing their jobs. Let’s look at the Australian evidence
Macroeconomics, 2nd edition
Olivier Blanchard & Jeffrey Sheen
7
The Large Flows of Workers
From the LFS data we conclude that: 2. The flows in and out of unemployment are large in relation to the number of unemployed.
40
Long term unemployment ratio (%)
long term unemployment ratio
12 11 10 9 8
35
Unemployment rate (%)
30
25
7 6
20
Unemployment rate
5
15 1986
4 1988 1990 1992 1994 1996 1998 2000 2002 2004
© 2007 Pearson Education Macroeconomics, 2nd edition Olivier Blanchard & Jeffrey Sheen 11
Movements in Unemployment
Movements in the Australian Unemployment Rate, 1959-2005 From 1959-74, the unemployment rate averaged 2%, thereafter just over 7%. (In 2006, it reached 4.9%)
© 2007 Pearson Education Macroeconomics, 2nd edition Olivier Blanchard & Jeffrey Sheen 3
The Large Flows of Workers
An unemployment rate may reflect two very different realities:

The average duration of unemployment is about three months. Economists worry about the proportion of longterm unemployed (ie those whose duration of unemployment >12 months). Why?
The participation rate is the ratio of the labour force to the noninstitutional civilian population. The unemployment rate is the ratio of the unemployed to the labour force.
© 2007 Pearson Education
Macroeconomics, 2nd edition
Olivier Blanchard & Jeffrey Sheen
4
A Tour of the Labour Market
Population, Labour Force, Employment, and Unemployment in Australia (in millions), December 2005
Employmen t 8.0 million
.07
.21
.1
.19
.1 Unemployment 0.42 million .1.
© 2007 Pearson Education Macroeconomics, 2nd edition Olivier Blanchard & Jeffrey Sheen
11
Unemployment Rate (%)
9
7
5
Unemployment Rate
3
1 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Shaded columns represent recessions
© 2007 Pearson Education
Macroeconomics, 2nd edition
Olivier Blanchard & Jeffrey Sheen
9
The Large Flows of Workers
From the LFS data we conclude that:
3. There are large flows in and out of the labour force, much of them directly to and from employment.
CHA PTER Chapter
6
The Medium Run The Labour Market
6-1
A Tour of the Labour Market
The (non-institutional) civilian population are the number of people potentially available for civilian employment. The civilian labour force is the sum of those either working or looking for work. Those who are neither working nor looking for work are out of the labour force.
Total population: 20.4 million Civilian population:16.4 million
Labour force: 10.6 million
Out of the labour force: 5.8 million
Employed: 10.0 million Unemployed: 0.54 million
Diminishing employability due to loss of skills, confidence
© 2007 Pearson Education Macroeconomics, 2nd edition Olivier Blanchard & Jeffrey Sheen 8
Long term Unemployment
The Large Flows of Workers
Average Monthly Flows Between Employment, Unemployment, & Nonparticipation, Australia, 2005
(1) The flows of workers in and out of employment are large (2) The flows in and out of unemployment are large in relation to the number of unemployed (3) There are also large flows in and out of the labour force, much of them directly to and from employment .096

© 2007 Pearson Education
Macroeconomics, 2nd edition
Olivier Blanchard & Jeffrey Sheen
10
6-2
Movements in Unemployment
Fluctuations in the aggregate unemployment rate affect:
Out of the Labour Force 4.4 million
6
The Large Flows of Workers
From the LFS data we conclude that:
1. The flows of workers in and out of employment are large. Separations consist of: