MAC08 Debt
Explains how normal savings does not lead to shortfall in agg demand. One needs debt -- especially leveraged debt.
Final Exam Questions:
1. Consider the model with 10 LLs, with 5 Acres each, and 40 Laborers, with fixed proportions production function. Show that with different types of market structures, LLs and Ls will get different shares of the total production. In particular create two models, one in which laborers get most of the production, and another in which LLs get most of the production. Use Nash Equilibrium concept to justify your results.
2. Explain why Shortfalls in Aggregate Demand cannot be a complete explanation of unemployment, when we take into account multiple periods.
3. Explain Fisher's Debt-Deflation theory about the causes of the Great Depression.
QE and (NOT) Swiss Inflation - Article shows how pumping money into economy did not lead to inflation -- This supports endogenous money, and shows govt cannot control money supply, as discussed in lecture
Monetary Reform: A Better Monetary System for Iceland - FROSTI SIGURJONSSON -- report commissioned by Iceland.
MAC07B -- Urdu Talk/Discussion with students of Adv Macro at PIDE - Wide ranging talk/discussion on education, knowledge, colonization, inferiority complex, self-transformation, religion, changing the world, self-worth, etc.
Islamic Version of Iceland Plan for Monetary Reform - Iceland Plan eliminates fractional reserve but keeps interest. Islamic Version eliminates BOTH interest and fractional reserve
A Monetary History of the USA - Milton Friedman & Anna Schwartz -- Wikipedia Summary of book
2 L8A Writeup of first 17m of lecture on Incompleteness of Keynesian Explanation - Writeup shows that Keynesian explanation of unemployment is seriously incomplete. This is because spelling out the micro details leads to a wide variety of different outcomes (but rarely unemployment).
1 Explaining Unemployment in the Great Depression: Effective Demand versus Debt-Deflation - 10 01 18 Lec 8 of Adv Macro considers the Keynesian General Theory of Deficiencies in Aggregate Demand as source of unemployment. This seems to be insufficient, and must be supplemented by Debt-Deflation theory of Fisher, plus more details on micro-structure