Economics News with a Historical Perspective
September 2, 2014
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. Budget Deficit
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.
August 11, 1987. President Reagan appointed Alan Greenspan to his first term as Chairman of the Federal Reserve. His fourth term as Chairman runs until June 20, 2004, and the rumor is circulating that he would accept a fifth nomination. (PS: Ben Bernanke was sworn in as Chairman on 2/1/2006.)
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.
The Classical Model
The Classical Model of Production and Employment focuses on the supply and demand for a single factor of production, labor, assuming that capital is fixed in the short run. Equilibrium in the labor market then determines the real wage rate and the level of output. This model provides an important reference point for understanding the innovations in the Keynesian models.
Additional models of interest are available at Classic Economic Models.
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