11:373:101 Lecture Notes - Lecture 24: Monetary Policy, European Monetary System, Money Supply
4 Dec 2016
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Document Summary
Country on periphery of europe has its own currency. Currency value is linked to the european monetary system. Very high current account deficit due to the reparation of profits. Large budget deficit, big government sector, huge debt (128% of gdp) High birthrate and women just now entering the workforce. Grows gdp and reduces unemployment (increases imports) Generates inflation (esp if unemployment is low) Supply-side policy (e. g. , tax incentives); industrial policy (e. g. , pick an industrial specialty to cultivate, maybe tariffs to protect that industry) Human resource policies like job training, welfare program, im(em)migration. Increase government spending on human resources and employ job training, welfare programs, etc. By increasing exports, country"s current account balance will look more positive (moves large current account balance towards normalcy) Make massive account balance more positive (move it toward normalcy) Supply side policy (create demand for labor) Generate culture where people aren"t relying entirely on government jobs. Expansionary fiscal policy makes gov"t deficit and debt worse.
