Economics News with a Historical Perspective
February 23, 2017
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.
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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.
Canada Nearly Breaks Up
October 30, 1995. Quebec voters responded to a referendum asking the question "Do you agree that Quebec should become sovereign, after having made a formal offer to Canada for a new economic and political partnership...", with a 49.5% vote for "yes" and a 50.5% vote for "no." The mechanism to dissolve the Canadian government and create two or more separate countries thus failed by half a percentage point. From an economic perspective, we can measure the risk this event posed to the Canadian financial markets by looking the spread between Canadian and U.S. bond yields.
Mexican Peso Plummets
December 20, 1994. The Mexican government's commitment to hold the peso/dollar exchange rate fixed (within a band) came to an end abruptly on December 20, 1994. Within 10 days of attempting to devalue the peso by 15%, the Mexican government ran out of international reserves and was forced to let the peso float. Within 90 days, the peso had lost 50% of its value.
China Fixes Value of Yuan
January 1994. China has maintained a fixed exchange rate for the yuan relative to the U.S. dollar since 1994. This has recently attracted attention as some have voiced concern that holding down the value of the yuan is making the prices of Chinese exports to the U.S. too cheap.
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.
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