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John B

Steve Jobs And The Economics Of Place | ThinkProgress - 1 views

thinkprogress.org/...obs-and-the-economics-of-place

externalities of production

shared by John B on 23 Nov 13 - No Cached
  • One of the most fundamental elements of the economics of cities goes by the oddball name “agglomeration externalities” which is basically the idea that individuals and firms obtain productivity boosts by clustering together.
  • You see this again during the development of the Apple I. Steve Wozniak is employed by Hewlett-Packard at the time
  • Silicon Valley is not only a hub of electronics and engineering but also geographically proximate to San Francisco and the arts and counterculture scene with the influence that has on Jobs’ life and the aesthetic orientation of his company over time. The story keeps going on like this. Jobs doesn’t build the company alone, or even build it with his formal partners. He also builds it with an array of formal and informal personal and professional associates that you only meet in certain kinds of places and that can only exist given the pre-existing high density of electronics firms in the area.
  • ...1 more annotation...
  • Part of the moral of the story is about the role of luck and contingency in any successful person’s life. But an important part of it is about the importance of clusters as such and the way that past success can lay the groundwork for future success. America is home to many of the world’s most successful high tech companies today in large part because we were home to many of the world’s most successful high tech companies 35 years ago.
  • John B on 23 Nov 13
     
    This article is about the biography of Steve Jobs. It is talking about how Jobs used agglomeration externalities, "individuals and firms obtain productivity boosts by clustering together". By the use of the location, Jobs managed build up the company, but he is not alone building this company. He has his personal and professional associates that result in a boost in productivity. They use agglomeration.
Amanda Anna G

Energy efficiency investments reap three times the economic rewards - FierceEnergy - 0 views

www.fierceenergy.com/...2014-02-03

efficiency

shared by Amanda Anna G on 07 Feb 14 - No Cached
  • Energy efficiency investments reap three times the economic rewards
  • The research reveals that every million dollars invested in energy efficiency programs in the region generated $3.87 million in economic output and 17.28 new jobs.
  • "The remarkably positive economic impact that investments in energy efficiency have had on both economic growth and job creation in the Southeast are helping to create a fundamental change in perspective,"
  • ...1 more annotation...
  • "SEEA's unique analytical approach has yielded valuable insights into how investments in energy efficiency and conservation can also create jobs and other tangible benefits, even in regions that have historically shown little commitment to energy efficiency,"
  • Amanda Anna G on 07 Feb 14
     
    This article is about efficiency, as the investments in energy efficiency programs created revenue and new jobs. Resources are not being wasted by inefficient use. The efficiency could also be related to economies of scale, since the firm is experiencing increasing returns to scale- every million dollars invested resulted in revenue and new jobs, and hence the work is becoming more efficient and may cause decreases in the long-run average costs.
Aleksi B

Job Creation Should Be Policy Priority, O.E.C.D. Report Finds - NYTimes.com - 0 views

www.nytimes.com/...riority-oecd-report-finds.html

supply side government job policies

shared by Aleksi B on 02 Oct 14 - No Cached
  • Aleksi B on 02 Oct 14
     
    The article talks about how job creation needs to be created by the use of supply side policies.
Haydn W

Rules on unemployment benefits tightened to end 'signing on' culture | Politics | The G... - 2 views

www.theguardian.com/...nt-benefits-signing-on-culture

Unemployment UK The Guardian Jobs

shared by Haydn W on 13 Apr 14 - No Cached
  • Rules on unemployment benefits tightened to end 'signing on' culture
  • Jobless will have to take 'basic steps' towards finding work before they can claim, as part of government push on welfare
  • The government is to hail the end of the "signing on" culture when it announces that unemployed people will have to take "basic steps" towards finding work before they can claim benefits.
  • ...4 more annotations...
  • the employment minister, will launch a significant government push on welfare this week by saying that unemployed people must prepare for their first interview with a Jobcentre Plus adviser by preparing a CV.
  • McVey will highlight tough new rules for newly unemployed people. She will say: "With the economy growing, unemployment falling and record numbers of people in work, now is the time to start expecting more of people if they want to claim benefits.
  • "This is about treating people like adults and setting out clearly what is expected of them so they can hit the ground running.
  • In return, we will give people as much help and support as possible to move off benefits and into work because we know from employers that it's the people who are prepared and enthusiastic who are most likely to get the job.
  • Haydn W on 13 Apr 14
     
    This new policy, outlined from the UK government's recent budget announcement aims to get young people out of the so called welfare culture and into employment. From around the end of the Second World War there has been a rapid increase in people leaving education and signing onto unemployment benefits. With these tougher measures the government hopes to prepare these people for work and curb the relative 7 - 8% unemployment rate. However the government has faced severe criticism, notably for their lack of efforts to get university graduates into jobs since raising university fees here from £3000 per year to £9000 when they came to power in 2010.
Marenne M

Youth unemployment: Generation Jobless at risk of becoming reality - 3 views

www.smh.com.au/...ng-reality-20140414-zquf3.html

unemployment

shared by Marenne M on 14 Apr 14 - No Cached
  • Marenne M on 14 Apr 14
     
    This article describes the unemployment among youths in Australia. It describes how no matter whether you have a degree or not, it is barely possible to find a job. This is due to a lack in demand for labor, which generally results from a lack of aggregate demand, meaning that the economy isn't operating at its full potential. Therefore there is a surplus of supply for a minimal demand of labor, leading to a decrease in wage cost and a decrease in chances of finding a job. This is why many people are recommending doing internships for free, because firms are no longer paying as much for the employees, but even these internships are hard to get.
John B

Jobs at a Turning Point - NYTimes.com - 0 views

www.nytimes.com/...jobs-at-a-turning-point.html

macroeconomic activity

shared by John B on 09 Mar 14 - No Cached
  • the employment report for February was a relief. The news that the economy added 175,000 jobs last month was better than anticipated, and much better than the dismal reports in December and January.
  • John B on 09 Mar 14
     
    This article is talking about how the unemployment has gone down. Even decreased more than expected. It also discuss how the parties have been thinking about the unemployment in the US.
Marenne M

Ebola Brings West Africa Economic Development to Screeching Halt - 0 views

www.voanews.com/...2597874.html

economic development

shared by Marenne M on 10 Feb 15 - No Cached
  • United Nations Development Program finds the Ebola epidemic is dramatically setting back prospects for economic development in Liberia, Sierra Leone and Guinea.
  • impact of Ebola has caused a breakdown in trust between these governments and their people.
  • “For instance, Liberia is going to record its first negative growth trend in 2014, which we estimate to be something as high as minus 1.8 percent negative growth, which is very serious,"
  • ...3 more annotations...
  • fragility of the countries' health systems, a lack of health care workers, and cultural practices that often accelerate the spread of Ebola.
  • Ebola crisis in West Africa has resulted in job losses, rising food prices, and agricultural disruption.
  • harp drops in the use of health and education services are likely to increase poverty, child and maternal mortality, and facilitate the spread of HIV/AIDS and malaria, particularly for the rural poor.
  • Marenne M on 10 Feb 15
     
    This article describes the impact of the Ebola virus on the economic development in Western Africa. The lack in health infrastructure has not only lead to negative economic growth, however it has also led to the decreased use of education and healthcare services, increased job losses, rising food prices, agricultural disruption, increased poverty, increased child and maternal mortality, and increased the spread of HIV/AIDS. The initially poor infrastructure in Western Africa has led to negative development.
Haydn W

Royal Mail shares soar 38% as Labour complains of knockdown price | UK news | The Guardian - 0 views

www.theguardian.com/...mail-share-price-buyers-profit

The Guardian Royal Mail Demand Supply Equilibrium UK `Shares FTSE100 Stock

shared by Haydn W on 12 Oct 13 - No Cached
  • Royal Mail shares soar 38% as Labour complains of knockdown price
  • Ed Miliband blames government for underpricing in 'fire-sale of a great British insititution' as investors make £284 paper profit
  • The government has been accused of shortchanging taxpayers by selling off Royal Mail at a knockdown price after shares in the privatised postal service rose by 38%
  • ...14 more annotations...
  • Miliband, the Labour leader, said the jump in the share price – which made an immediate £284 paper profit for almost 700,000 Royal Mail investors – showed that the privatisation was a "fire sale of a great British institution"
  • Royal Mail stock, which the government sold at 330p, leapt to 455p
  • Royal Mail's market value rose by £1bn to £4.3bn – confirming that it will join the FTSE 100 list of Britain's biggest companies.
  • The government had valued Royal Mail at a maximum of £3.3bn, and had attacked analysts' valuation of £4.5bn as "way out".
  • Frances O'Grady, general secretary of the TUC, tweeted: "Privatising #RoyalMail has become little different from selling five pound notes for four quid."
  • George Osborne said the privatisation had been a huge success.
  • Asked whether the shares had been sold too cheaply, the chancellor said: "All privatisations are done at a discount.
  • The National Audit Office, the public spending watchdog, will investigate the pricing of the float, but Cable dismissed the huge share price rise – which was bigger than that experienced on the 1980s flotation of BT and British Gas – as "froth and speculation" and said "what matters is where the price eventually settles".
  • The stockbrokers Peel Hunt said: "This is not 'froth'; it's real people buying, selling."
  • Joe Rundle, head of trading at ETX Capital, described the share price surge as a "dazzling stock market debut".
  • Private investors who bought their shares directly from the government will have to wait until at least Tuesday if they want to sell. About 690,000 people were granted 227 Royal Mail shares worth £749.10 (at the 330p float price) following overwhelming public demand for the shares.
  • The public applied for more than seven times the number of shares available to them, which meant nearly everyone did not get as many shares as they had asked for.
  • More than 36,000 people who applied for more than £10,000 worth of shares were prevented from buying any at all. About 40 people applied for shares worth £1m or more.
  • It is understood that about 20% of the shares available have gone to sovereign wealth funds – including those of Kuwait, Norway and Singapore – and other foreign funds. Royal Mail's 150,000 employees collected 10% of the shares free of charge, worth about £2,200 each at the flotation price and now worth £2,900. Employees were also allowed to buy a further £10,000 worth, but are not allowed to sell for three years
  • Haydn W on 12 Oct 13
     
    This article shows how demand for shares in the newly floated UK postal service Royal Mail has pushed the price up from 330p a share to 450p. This is the price in which demand is seen to be equal to supply, something the UK Government are being criticised for failing to notice as they believed 450p was a far to high price. The move itself if highly controversial and has been a hotly debated topic ever since it's proposal with many employees fearing that jobs will be lost.
  • Yassine G on 12 Oct 13
     
    I think this is really normal. Simply because private companies tend to have higher efficiency rates and therefore make more profits, this is the business part of the reason. Now if we consider the economical reason, I think that higher profits (deviants) will attract a lot more shareholders, this means higher demand. from the other side, shareholders will be willing to keep their shares as the company is making more and more profits, therefore less shares supply. So in short, more demand, less supply of shares could not lead to anything else except hiher prices and greater value of the company.
Yassine G

Unemployment Claims Decline to Nearly a 7-Year Low - NYTimes.com - 0 views

www.nytimes.com/...ne-to-nearly-a-7-year-low.html

unemployment decline low nytimes com government

shared by Yassine G on 13 Apr 14 - No Cached
  • Yassine G on 13 Apr 14
     
    This article talks about how unemployment is decreasing and what are the causes. We saw that there was a seasonal unemployment and that the government's intervention was helpful as it created new jobs 
Zuzanna G

Fed must choose: More jobs or less inflation - 1 views

www.marketwatch.com/...s-or-less-inflation-2014-04-22

inflation

shared by Zuzanna G on 22 Apr 14 - No Cached
  • Zuzanna G on 22 Apr 14
     
    This article deals with the connection between inflation and unemployment, which is one of the current issues we're discussing.
John B

Drop in U.S. Jobless Claims, Rising Consumer Confidence Point to Recovery - Bloomberg - 2 views

www.bloomberg.com/...-000-last-week-to-388-000.html

Aggregate demand

shared by John B on 24 Mar 14 - No Cached
  • Fewer Americans filed claims for jobless benefits last week and consumer confidence stabilized
  • indicating strengthening sales in the U.S. and overseas are helping manufacturers like United Technologies Corp. (UTX)
  • We have an economy that is growing solidly,
  • ...2 more annotations...
  • A slowdown in firings and growing payrolls may spur further gains in consumer spending, which accounts for about 70 percent of the economy.
  • report today showed orders placed with factories unexpectedly fell in February for the first time in four months, reflecting weaker demand for capital goods and military aircraft.
  • John B on 24 Mar 14
     
    This article is dealing with the economy in the U.S. It starts with stating that consumer confidence is stabilized, which could be because of the growing economy in the U.S. For example, the sales in U.S. and overseas are strengthen. One could also see from this article that the amount of people being fired from their jobs decrease which contributes to a growing consumer spending. Although, the demand for capital goods and military aircraft is becoming weaker.
Jakub B

The Country Where Unemployment Is Better Than Employment - 0 views

www.psmag.com/...oyment-better-employment-74434

efficiency

shared by Jakub B on 11 Feb 14 - No Cached
  • Jakub B on 11 Feb 14
     
    The article discusses the problem of job allowances and other benefits that discourage people from working. Germany is an example of such a country and its policy is described in the article.
Amanda Anna G

Centre for Policy Studies: Productivity is Key to Securing UK's Economic Recovery - 1 views

www.ibtimes.co.uk/-uks-economic-recovery-1437283

aggregate-demand

shared by Amanda Anna G on 18 Mar 14 - No Cached
  • Centre for Policy Studies: Productivity is Key to Securing UK's Economic Recovery
  • Yesterday saw the release of another good set of jobs figures. Employment rose and youth unemployment and long term unemployment fell. Nevertheless, to secure the recovery and generate sustainable real wage rises, we need to break the decade long stagnation in productivity which is holding back our economy.
  • These increases in employment and hours worked have been crucial in restoring economic growth.
  • ...2 more annotations...
  • However, at some point the gains to be made from increasing the number of workers and increasing the number of hours will diminish. Education and welfare reforms combined with more robust growth in aggregate demand will cause the pool of available workers to shrink. When we reach that point, productivity will need to rise to support output growth and real wage rises.
  • Weak demand and labour hoarding have often been cited as the causes for this sustained weakness. However, stronger growth in demand in 2013 has not led to significant increases in output per hour. Rising aggregate demand must surely lead to some increases in productivity over time but it is clear that other structural reasons are holding back productivity growth.
  • Amanda Anna G on 18 Mar 14
     
    This article discusses how to secure the UK's economic recovery. It is suggested that increase in employment and hours worked could restore economic growth. At some point, this increase will diminish due to growth in the aggregate demand combined with education and welfare reforms that results in a decrease in the available workers. However, it is argued that rising aggregate demand would lead to increase in the productively over time, but other reasons are holding back productivity growth. 
Pietro AA

Analysis: Energy costs keep Japan's focus on nuclear, despite risks and use of renewabl... - 0 views

www.foxnews.com/...-nuclear-despite-risks-and-use

scarcity Opportunity Cost energy risks japan

shared by Pietro AA on 16 Sep 13 - No Cached
    • Pietro AA
      Pietro AA on 16 Sep 13
       
      Other scarse vaariables introduced: time and technology
    • Pietro AA
      Pietro AA on 16 Sep 13
       
      safety is a desire of most men and it is also not infitite therefore it is scarse.
  • ctions take about six months for each reactor, and obtaining con
  • ...19 more annotations...
    • Pietro AA
      Pietro AA on 16 Sep 13
       
      a conflict between the scarsity of safety and scarsity of energy
    • Pietro AA
      Pietro AA on 16 Sep 13
       
      a conflict between the scarsity of safety and scarsity of energy
  • Energy costs keep Japan's focus on nuclear, despite risks and use of renewables
  • other plants remained closed for intensified safety checks
  • The issue is cost, and to a lesser extent, concern over a resurgence in climate-changing carbon emissions due to increased use of coal and oil to generate power. Clean energy still only accounts for 10 percent of total consumption — most of it hydropower. Much of the new capacity approved has yet to come online.
  • nuclear power remains essential, even with a surge in generation capacity from solar, wind and other renewable sources, and that the world's No. 3 economy cannot afford the mounting costs from importing gas and oil.
  • Japan has managed to avoid power rationing and blackouts. Industries have moved aggressively to avoid disruptions by installing backup generators and shifting to new sources, such as solar power.
  • households no
  • paying 30 percent more for electricity than before, with more rate hikes to come.
  • prompted a rethink of plans to raise nuclear capacity from one-third to over half of total demand.
  • Reliance on imported oil and gas has surged from about 60 percent of energy consumption to about 85 percent.
  • The recent weakening of the Japanese yen has added to the burden on the economy from oil and gas imports.
  • Abe and others in favor of resuming nuclear power contend that renewable energy is too expensive and unreliable — wind doesn't always blow, the sun doesn't always shine.
  • Apart from those issues, national security requires that Japan retain some self-sufficiency
  • Local communities are divided: many have relied heavily on nuclear plants for jobs and tax revenues, but worry over potential risks.
  • hat there's a huge opportunity in power
  • We're also seeing radical efficiency gains.
  • he disposal and security of nuclear waste are issues yet to be resolved.
  • For now, however, it appears any phase-out of nuclear power will be very gradual.
  • "In the long term if we can create new resources that are more efficient than the current oil-based system, then we can rely less on nuclear power, that's quite possible," Adachi said. "But it will take quite a long time."
  • Pietro AA on 16 Sep 13
     
    This article shows how, since the meltdown of the Fukushima plant in 2011, the "want" of security (which is scarce) increased and gave energy problems to the country (energy is one of the most important scarce resources . Japan finds itself making decisions limited by the scarcity of energy, safety, time and technology. Should it take risks and stop spending money? Should it keep everybody safe and just go for the hydrocarbur plants? Should it simply invest on renewable energy plants? Should it take time and reaserch   Pietro
John B

BlackBerry confirms loss of $965 million as sales drop 45% | Mobile - CNET News - 0 views

news.cnet.com/...-$965-million-as-sales-drop-45

demand

shared by John B on 27 Sep 13 - No Cached
  • BlackBerry offered few surprises as it posted a fiscal second-quarter loss of nearly $1 billion as its smartphones continued to struggle in the marketplace.
  • The official results come a week after BlackBerry released preliminary figures and said it would cut roughly 40 percent of its staff as it shifted its focus away from consumers and more towards business customers.
  • Its newer phones as a whole didn't seem to resonate with consumers. The company said it shipped 3.7 million BlackBerrys, but a majority of them were made up of BlackBerrys running older software, which remain popular in emerging markets because of their low price.
  • John B on 27 Sep 13
     
    This article is about how the BlackBerry phones are dropping in demand, and therefore the company have to "cut roughly 40 percent of its staff..." because of the loss of $965 million. When they have to cut down on he staff, it means that they can't afford the service that those workers can provide.
  • John B on 27 Sep 13
     
    This article is about how the BlackBerry phones are dropping in demand, and therefore the company have to "cut roughly 40 percent of its staff..." because of the loss of $965 million. When they have to cut down on he staff, it means that they can't afford the service that those workers can provide.
Marenne M

True Costs of So-called Cheap Food | Ellen Gustafson - 0 views

www.huffingtonpost.com/...lled-cheap-food_b_4337423.html

'externalities of production'

shared by Marenne M on 26 Nov 13 - No Cached
  • when you look at the prices of so-called "conventional" junk food compared with local, organic fruits and veggies, on a calorie per dollar basis, the junk often wins.
  • Many people assume that it's the produce or organic foods that "cost more" than highly processed, shelf-stable ubiquitous and cheap junk food, but what if the price tags that we see don't tell the whole story?
  • hich requires acres of corn fields, seeds, gallons of water, gas for heavy machinery, pounds of fertilizer and sprays of pesticides, and government subsidies.
  • ...9 more annotations...
  • give them antibiotics, deal with their waste, transport them to slaughter, power the slaughter facility, refrigerate the ground meat and then cook it
  • processed wheat bun and condiments.
  • so efficient that all of those costs amortize over tons of ground beef and fixings to make a really cheap burger, or are there parts of that whole list of "costs" that don't actually show up in the price of our fast food burgers?
  • Examples of costs not currently factored into our food supply include the environmental outcomes of chemically-intensive and petroleum-intensive agriculture, costs for soil erosion, real water and irrigation costs, pesticide and waste runoff that creates dead zones in our waterways (like the "New Jersey-sized dead zone in the Gulf of Mexico" that stems from nitrogen runoff from our Corn Belt) and then affects the livelihoods of fishermen and shrimp farmers in the Gulf region.
  • Hidden health costs like our global obesity epidemic and the food-related public health issues of heart disease, diabetes, and cancer are certainly not included in the cost of your fast food meal.
  • unpaid externalities like low wages for food workers that often mean government subsidies like food assistance, which is what over 50 percent of fast food worker families are getting
  • "value" and "low prices" of cheap food that we see at the cash register, are not the whole story
  • We are paying today in our health and our taxes and our children
  • will be paying tomorrow with a degraded environment, dirty water, decimated communities and jobs, and denigrated health.
  • Marenne M on 26 Nov 13
     
    This article describes how processed food and fast food have many negative externalities which in the end makes them cost more than organic foods which are more expensive in the stores. Processed foods may be cheaper than organic food, however the pollution during the process of producing the food, the health problems involved and the low wages which are unpaid for are all consequences which in the end will make these foods cost more.
Marenne M

Oil prices will drop if U.S. lifts crude export ban: study | Shanghai Daily - 2 views

www.shanghaidaily.com/...article_xinhua.aspx

aggregate supply

shared by Marenne M on 01 Apr 14 - No Cached
  • Gasoline costs are tied to a global market, and this study shows that additional exports could help increase supplies, put downward pressure on the prices at the pump and bring more jobs to America.
  • if export was allowed, the cost of gasoline, heating oil and diesel fuel is projected to fall
  • United States is expected to shift from a net importer to a net exporter by 2020
  • ...1 more annotation...
  • On an aggregate supply-demand basis, the country is rapidly approaching a self-sufficiency rate of 90 percent
  • Marenne M on 01 Apr 14
     
    This article describes how the U.S. is considering becoming more self-suffiecient in the fuel industry. The want to decrease their  imports and increase exports. Decreasing their imports will decrease import cost, increasing the aggregate supply. Simultaneously, increasing export will increase aggregate demand. This will shift the U.S. from a net importer to a net exporter.
John B

Long-term unemployment: What the U.S. can learn from Sweden - The Term Sheet: Fortune's... - 1 views

finance.fortune.cnn.com/...-long-term-unemployment-sweden

unemployment

shared by John B on 14 Apr 14 - No Cached
  • less than 10% of Americans who were unemployed had been so for more than 27 weeks. Now, 35.8% of unemployed Americans fit into this category.
  • Long-term unemployment is a particularly pernicious problem because of its compounding nature -- long stretches of unemployment erode workers' skills, while employers have an irrational bias against the long-term unemployed.
  • Take Sweden
  • ...6 more annotations...
  • these workers find it harder and harder to find a job.
  • One 2007 study showed that out of six different Swedish programs, whose purposes ranged from worker retraining, helping workers maintain contact with former colleagues, temporary government employment, and employment subsidies, only the latter was effective at bringing down long-term unemployment.
  • A wage subsidy is a program where the government pays part of a worker's check, thus raising the worker's income and inducing firms to hire more workers.
  • Wage subsidies aren't just a potential solution to the debate over the minimum wage. They could also help bring down U.S long-term unemployment as well.
  • Wage subsidies haven't taken off in the U.S., primarily for political reasons.
  • The experience in Sweden shows that this policy can help the long-term unemployed find gainful employment.
  • John B on 14 Apr 14
     
    This article deals with the long-term unemployment issue in the US that have been rising a lot since 2002. One solution to this is to follow one of the Swedish programs, wage subsidies. This have given great results and might be a good solution to the problem in the US as well.
Pietro AA

S. Korea's Economy Grows More Than Forecast as Exports Climb - Bloomberg - 0 views

www.bloomberg.com/...forecast-as-exports-climb.html

aggregate demand inflation s.korea forecast exports climb economy

shared by Pietro AA on 24 Apr 14 - No Cached
  • South Korea’s economy expanded at a faster pace than forecast, showing momentum that could boost inflation pressures and build a case for a rate increase.
  • Gross domestic product grew 0.9
  • rivate consumption increased,
  • ...5 more annotations...
  • Exports weathered the won’s 8 percent climb against the dollar
  • rowth will accelerate to the quickest pace this year since 2010, helping push inflation up to its target band.
  • he economy is doing well broadly, across exports, consumption and jobs
  • ncrease in the nation’s exports f
  • Growth was constrained by weakness in business investment,
  • Pietro AA on 24 Apr 14
     
    great article about the macroeconomy of S.Korea. Maybe it gives too much info so it leaves less space for analysis.
Haydn W

Inflation Forecast 2014-2014: Continued Mild Price Increases - 1 views

www.forbes.com/...continued-mild-price-increases

Forbes Inflation Unemployment Phillips Curve Trade-off

shared by Haydn W on 03 May 14 - No Cached
  • Inflation is likely to remain mild in the next two years, but first a caution: none of the inflation forecasting models is doing a good job these days.
  • the Phillips Curve was our primary way of looking at inflation. William Phillips found an inverse relationship between inflation and unemployment over the period 1861-1957. This simple approach was used here in the United States in the 1960s and 70s.
  • With lower unemployment you would expect greater inflation. However, the Phillips Curve does not explain why inflation didn’t go down much when our unemployment rate was high a few years ago.
  • ...4 more annotations...
  • Milton Friedman said “Inflation is always and everywhere a monetary phenomenon . . . .” The relationship was solid for a long time, though financial changes in the 1990s made the theory harder to apply.
  • Unfortunately, the expectations-augmented Phillips Curve has not worked well in recent years. One study found that the predicted inflation for 2010 was negative 4.3 percent, while actual inflation was still positive.
  • Different theories tell us that the actual dynamics by which inflation changes are influenced not only by unemployment but also by inflation expectations.
  • Two different money concepts have been used, the money supply (such as the M2 definition) and the monetary base Recent data for both concepts indicate that inflation should have been much higher in recent years. The fact that inflation has accelerated very little suggests that in the current environment, the money-inflation connection is not very tight.
  • Haydn W on 03 May 14
     
    This article from Forbes is primarily titled to be a forecast about inflation in the coming fiscal year but it also interestingly (and relevant to our studies) discusses the different arguments and criticism surrounding the modelled Phillips Curve. The article also contains an interesting graph that is based on recorded statistics about inflation and unemployment which helps to demonstrate the problems with the Phillips Curve model. 
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