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Economic Fluctuations

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Economic Fluctuations

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  1. Economic Fluctuations Seminar – 26 Nov. 2009 p.stankov

  2. Outline of the talk • The impact of the Great Recession on firms – a case study of the pornography industry • Is the Great Recession Over?

  3. The impact of the Great Recession on firms • Read the handout from The Economist: “The trouble with pornography” • Answer the following: • What are the key pieces of information for managerial decision makers in this industry? • Why are these important for decision making? • Are there missing facts?

  4. Recessions and unemployment

  5. Question for Discussion: • Come up with a policy or policies to try to reduce the natural rate of unemployment. • Note whether your policy targets frictional or structural unemployment.

  6. Is the Great Recession Over? • Farmer 2009 criteria: • monthly year-on-year rate of growth of the stock market changed direction an average of 4.4 months before the end of recessions • Unemployment growth turns direction around the end of the recession date

  7. Stock markets growth, unemployment growth and recessions Source: Farmer 2009 article

  8. The current situation: Visit bls.gov For more

  9. Unemployment and unemployment growth in the previous two US recessions Source: Farmer 2009 article

  10. Where are the next (still hidden) bad news? • Government debt – inflation – high interest rates spiral • Commercial banks “addicted” to cheap credit from central banks • Recovery only temporary when government withdraws from pushing up aggregate demand