Crisis
18
Discussion of the Recent Financial Crisis & Other Recent Events
MACROECONOMICS
Macroeconomics Prof. N. Gregory MankiwRudra SensarmaKozhikode Indian Institute of Management
PowerPoint Slides by Ron Cronovich
© 2013 Worth Publishers, all rights reserved
www.rudrasensarma.info ®
Learning objectives & outcomes Macroeconomic implications of: Japan’s prospective PM and his plans The Eurozone mess and a Greek default The Global crisis and macroeconomic policy
1
Shinzo Abe’s plans for Japan
Shinzo Abe is widely expected to become PM of Japan in 2013 Japan’s debt is managed by the Ministry of Finance (MoF) by selling bonds directly to investors Abe has suggested that the Bank of Japan (BoJ) monetize the government’s deficit
CHAPTER 11
Aggregate Demand I
2
BRAINSTORM Implications for the domestic economy
Why has are financial markets concerned?
Why will it require the BoJ’s inflation target to be raised?
CHAPTER 11
Aggregate Demand I
3
BRAINSTORM Implications for the Yen
What will the monetization programme mean for the Yen? Will it help GDP growth? What will the revaluation of Yen mean for interest rates that Japan pays on its external debt? How will the higher inflation affect foreign investment? The policy may work if Yen falls but not by too much
CHAPTER 11
Aggregate Demand I
4
Greece and the Euro crisis
Europe has long dreamt of unification to strengthen trade & financial flows (to challenge the might of the dollar or strengthen Germany’s position within Europe or to end wars?) The common Euro currency was introduced in 2002
CHAPTER 11
Aggregate Demand I
5
BRAINSTORM
Greece and the Euro crisis
How does a common currency help? European central bank was established to set interest rate (the official repo rate) to target inflation at 2% Pre-conditions for joining included low govt deficit, low debt, low inflation, low interest rate, stable exchange rate How did it benefit Greece? Why did
Discussion of the Recent Financial Crisis & Other Recent Events
MACROECONOMICS
Macroeconomics Prof. N. Gregory MankiwRudra SensarmaKozhikode Indian Institute of Management
PowerPoint Slides by Ron Cronovich
© 2013 Worth Publishers, all rights reserved
www.rudrasensarma.info ®
Learning objectives & outcomes Macroeconomic implications of: Japan’s prospective PM and his plans The Eurozone mess and a Greek default The Global crisis and macroeconomic policy
1
Shinzo Abe’s plans for Japan
Shinzo Abe is widely expected to become PM of Japan in 2013 Japan’s debt is managed by the Ministry of Finance (MoF) by selling bonds directly to investors Abe has suggested that the Bank of Japan (BoJ) monetize the government’s deficit
CHAPTER 11
Aggregate Demand I
2
BRAINSTORM Implications for the domestic economy
Why has are financial markets concerned?
Why will it require the BoJ’s inflation target to be raised?
CHAPTER 11
Aggregate Demand I
3
BRAINSTORM Implications for the Yen
What will the monetization programme mean for the Yen? Will it help GDP growth? What will the revaluation of Yen mean for interest rates that Japan pays on its external debt? How will the higher inflation affect foreign investment? The policy may work if Yen falls but not by too much
CHAPTER 11
Aggregate Demand I
4
Greece and the Euro crisis
Europe has long dreamt of unification to strengthen trade & financial flows (to challenge the might of the dollar or strengthen Germany’s position within Europe or to end wars?) The common Euro currency was introduced in 2002
CHAPTER 11
Aggregate Demand I
5
BRAINSTORM
Greece and the Euro crisis
How does a common currency help? European central bank was established to set interest rate (the official repo rate) to target inflation at 2% Pre-conditions for joining included low govt deficit, low debt, low inflation, low interest rate, stable exchange rate How did it benefit Greece? Why did