Economics News with a Historical Perspective
April 19, 2015
The Econ Review features a historical perspective on economics news and opinions with daily updates. All original material is copyrighted. Off-site references open in new windows.
Address comments to email@example.com.
U.S. Payroll Employment
In the News
The Phillips Curve
John Cochrane uses very similar Phillips Curve charts to review recent history and current issues.
Euro Roller Coaster
The wild ride continues.
The latest news and views.
Continental-Illinois Bank "Too Big To Fail"
May 17, 1984. Continental Illinois National Bank and Trust Company is the largest bank failure in the history of the Federal Deposit Insurance Corporation. Resolving this crisis pushed to the forefront the "too big to fail" principle that argues in favor of government intervention to avert instability in financial institutions large enough that, were they to fail, the integrity of the financial markets could be in doubt.
Volker Hits Brakes; Recession Follows
1982 In a widely announced policy move, Paul Volker and the Fed slowed the rate of growth of the money supply to curtail the recent inflationary spiral. Although some mathematical proofs exist that anticipated monetary policies have no real effects, the U.S. unemployment rate increased from 7.5% in 1981 to over 9.5% in 1982.
Reagan Tax Cut
August 15, 1981. President Reagan signed into law the Economic Recovery Tax Act, also known as the Kemp-Roth bill after its two principal sponsors, U.S. Representative Jack Kemp and Senator Bill Roth. The Reagan tax cut reduced marginal rates by about 23% over three years and instituted adjustments for inflation in the bracket limits. The latter eliminates "bracket creep" where individuals find themselves in higher tax brackets as incomes increase simply due to inflation even if real incomes do not change.
The IS/LM Model
The IS/LM Model changes the focus from factors of production (i.e. the Classical Model) to demand for output. The equilibrating factor becomes the interest rate instead of the real wage rate. Most importantly, the model demonstrates that the economy can be in a stable equilibrium at less than full employment.
Additional models of interest are available at Classic Economic Models.
Check the directory of economics clubs to see if your club is listed. Links are free.