New answers tagged

1 vote

Why is there increased speculation that America might go into a recession ? If they do will the rest of the world also face downturn?

This question is really a set of questions. 1 ) Will raising rates lead to a recession? 2 ) Will the US go into a recession (whatever the cause)? 2 ) Would a US recession have spillover effects to ...
user avatar
  • 1,542
1 vote

In what ways will taxing corporations reduce inflation?

It is actually not crystal clear whether corporate taxes reduce inflation. There are both demand and supply effects to consider (see Tanzi 1982). Lets start by considering the demand side of things. ...
user avatar
  • 41.5k
0 votes

Unemployment only differs from its natural rate if expected inflation is different from actual inflation - why?

Mankiw probably refers there to the Expectations Augmented Philips Curve (EAPC) or some related model. According to EAPC the following relationship holds (See Romer Advanced Macro pp 259-262): $$ \...
user avatar
  • 41.5k
2 votes

Savings = Investment. High interest rates stifle investment. High interest rate encourage savings. Isn't this a contradiction?

tl;dr There is absolutely no contradiction. $I=S$ is purely definitional like saying all triangles have three angles. It holds always because we defined the word saving in such way to always be equal ...
user avatar
  • 41.5k
1 vote

Does high inflation in the UK and US have the same cause?

Not all causes are the same but broadly speaking they are very similar. Inflation is positive change in the price level and the price level is determined by equilibrium in money market. There are ...
user avatar
  • 41.5k

Top 50 recent answers are included