the lucas imperfect information model...tidak ada trade-off jangka pendek ... output dan inflasi...

Konsekuensi pokok dari ekspektasirasional adalah: (Robert Lucas)

tidak ada Trade-off jangka pendekantara inflasi & pengangguran.

alat kebijakan ekonomi tidakefektif dan tidak dapatmeningkatkan kinerjaperekonomian.

The Lucas Imperfect Information Model

Gagasan utama model Lucas (1972) & Phelps (1970) :

Ketika produsen mengamati perubahan harga produknya tidak mengetahui apakah terjadi

perubahan dari harga relatif atau perubahan harga agregat.

Ketika harga barang produsen meningkat terdapatdua kemungkinan :

-kenaikan tingkat harga atau kenaikan harga relatif semua brg

perubahan harga agregat menghasilkan produksi optimal yg tidak berubah.

2

Kasus Informasi Sempurna : Perilaku Produsen

Terdapat barang2 yg berbeda, produsen memproduksi suatujenis barang, i, memiliki fungsi produksi:

Li = jml TK,

Qi =jml barang yg dihasilkan

Konsumsi = Ci, = pendapatan riil = penerimaan,

PiQi, dibagi harga pasar barang, P. P = indeks harga barang

Utilitas tergantung dari konsumsi (positif) dan jumlah pekerja(negatif), dirumuskan:

)1.6(ii LQ

)2.6(,1

iii LCU

3

Kasus Informasi Sempurna (stok uang diamati terbuka)

Perilaku Produsen

• Jika harga agregat (P) diketahui, maksimisasi dgn mensubstitusiCi=PiQi/P & Qi=Li dalam (6.2) shg diperoleh:

• Pasar diasumsikan bersaing, individu memilih Li utk maksimisasiutilitas, f.o.c:

atau

Persamaan dlm bentuk logaritma:

Jadi penawaran tenaga kerja & produksi meningkat jika harga relatif produknya meningkat.

)3.6(.1

i

iii L

P

LPU

)6.6()(1

1ppii

)5.6()/( )1/(1 PPL ii)4.6(,01

ii L

P

P

4

Kasus Informasi Sempurna : Permintaan

• Permintaan barang diasumsikan tergantung 3 faktor: pendapatanriil, harga barang relatif, & gangguan acak thd preferensi

• Permintaan barang i adalah:

γ =log pendapatan riil agregat,

zi = goncangan permintaan barang i, dan

η = elastisitas permintaan masing2 barang thd perubahan harganya.

qi = permintaan utk barang i, zi mempunyai nilai rataan antarabarang sama dgn nol. y diasumsikan sama dgn rata2 qi dan p adalahrata-rata pi.

)7.6(,0),( ppzyq iii

)8.6(iqy )9.6(ipp

5


Secara intuisi, Pers: (6-7)--(6-9) menyatakan

permintaan barang akan lebih tinggi ketika

produksi total (penerimaan/pendapatan total)

lebih tinggi, ketika harganya relatif rendah thd

harga lainnya, & ketika individu memiliki

preferensi lebih kuat.

6


• Permintaan agregat dari model menjadi:

• Persamaan menunjukkan hub. terbalik antara harga & output

m = variabel generik yg mempengaruhi permintaanagregat, spt target logGDP dpt juga uang (namunsisi kanan harus diganti dgn: m+v-p,

v = gangguan permintaan agregat selain pergeseransupply uang)

)10.6(pmy

7

Kasus Informasi Sempurna : Ekuilibrium

• Keseimbangan dalam pasar barang i mensyaratkan bhwpermintaan masing2 produsen sama dgn penawarannya

• Dari persamaan (6.6) dan (6.7) diperoleh:

• Penyelesaian persamaan pi menghasilkan:

• Rata-rata pi :

• rata-rata zi adalah nol.

)11.6()()(1

1ppzypp iii

)12.6()(1

1pzyp ii

)13.6(1

1pyp

8

Kasus Informasi Sempurna : Ekuilibrium

• Nilai keseimbangan γ adalah: (Y=1, dari pers 6.2)

• Dari persamaan (6.14) dan (6.10) diperoleh:

p = m (6.15)

• Uang adalah netral pada model, • peningkatan m mendorong peningkatan yg sama

pada pi, & indeks harga keseluruhan, p. Tidak ada variabel riil yg dipengaruhi

)14.6(0y

9

Perkembangan Output akibat peningkatan AD dan/atau AS

BJ-IPB

Y=F(K,L,Tek..)

IS: Y=C(Y-T)+I(Y,i)+G+(X-M)

W P F u ze ( , )

P W ( )1

LM relation: M

P YL i( )

Y = A.L

P P FY

Lze

( ) ,1 1

Kasus Informasi Tidak Sempurna : (stok uang yang tidak teramati)

Perilaku Produsen

Definisi harga relatif barang i adl ri=pi-p, dlm bentuk lain:

Artinya, harga barang sama dgn tingkat harga agregat dan

harga relatif barang

Asumsi Lucas: (1) individu menemukan ekspektasi ri yaitu

pi, & individu memproduksi sebanyak yg diperkirakan .

Dari persamaan (6.6) sebelumnya menjadi:

)16.6(

)(

i

ii

rp

pppp

)17.6(].|[1

1iii prE

11

Asumsi Lucas (2) : produsen menggunakan ekspektasi ri

pada pi. E[ri I pi] diasumsikan ekspektasi yg benar dan

distribusi gabungan aktual dari dua variabel

Pada penghitungan E[ri I pi], shock moneter (m) dan shock

permintaan barang individu (zi) diasumsikan terdistribusi

normal. m memiliki rata-rata E[m] dan ragam Vm.

Rata-rata zi adl nol dan ragam Vz dan bebas dari m.

Variabel-variabel: p, ri, pi=p+ri juga diasumsikan tersebar

normal dan bebas (independent).

Bentuk E[ri I/pi]:

)18.6(]|[ iii pprE

12

Kasus Informasi Tidak Sempurna : (stok uang yang tidak teramati)

Perilaku Produsen

)19.6(])[(

][]|[

pEpVV

V

pVV

VpE

VV

VprE

i

pr

r

i

pr

r

pr

rii

• Pi sama dgn ri ditambah variabel bebas, persamaan

(6.18) menjadi:

13

Kasus Informasi Tidak Sempurna : Perilaku Produsen

Dengan mensubstitusi pers (6.19) ke dalam pers (6.17) akan diperoleh

persamaan penawaran individu TK:

Bentuk rata-rata persamaan (6.20) diantara produsen (definisi γ & p)

yg menunjukkan persamaan output:

)20.6(])[(

])[(1

1

pEpb

pEpVV

V

i

i

pr

ri

)21.6(])[( pEpby i

14


Persamaan (6.21) merupakan persamaan kurva

penawaran Lucas yg menyatakan output awal dari level

normal (nol di dlm model) mrp peningkatan fungsi

kejutan tingkat harga

Model Lucas menunjukkan landasan melihat penawaran

agregat (AS)

15


Kasus Informasi Tidak Sempurna :Keseimbangan

Kombinasi kurva penawaran dgn persamaan permintaanagregat (6.10) dan pemecahan p & γ menghasilkan:

Bentuk ekspektasi dari kedua sisi persamaan (6.22) adl:

Atau

Dgn menggunakan pers (6.25) dan fakta bahwa

m=E[m]+(m-E[m]),

)22.6(],[11

1pE

b

bm

bp

)23.6(].[11

pEb

bm

b

by

)24.6(],[1

1][

1

1][ pE

bmE

bpE

)25.6(].[][ mEpE

16

)27.6(]).[(1

mEmb

by

Kedua pers terakhir komponen permintaanagregat yg diobservasi, E[m], hanya mempengaruhiharga, namun komponen yg tidak diobservasi,

m-E[m] memiliki dampak riil. 17

)26.6(]),[(1

1][ mEm

bmEp

Bentuk lain dari persamaan (6.22) dan (6.23) adl:


Peningkatan penawaran uang meningkatkanpermintaan agregat & menyebabkan pergeseran kurva

permintaan masing2 barang.

Jika peningkatan pd variabel yg tdk diobservasi, masing2 suplier menduga porsi peningkatan

permintaan produk merefleksikan shock harga relatifshg produsen meningkatkan output

18


Dampak peningkatan m berbeda-beda.

Dampak pergeseran ke atas keseluruhandistribusi m, dengan realisasi m-E[m] tetap

supplier menghubungkan peningkatanpermintaan produknya dengan uang shgtidak merubah outputnya shock

perubahan selera menyebabkanvariasi di dlm harga relatif, tapioutput riil keseluruhan tidakmeningkat

19


Jika diketahui b=[1/(γ-1)][Vr/(Vr+Vp)] (lihat pers (6.20)), Vp=Vm/(1+b)2, kurva permintaan (6.7) & kurva penawaran (6.20) maka dapat digunakan u/ mencari ragam pi-p, yaitu Vr.

dapat mensubstitusi γ=b(p-E[p]) ke dalam (6.7) u/ menentukanqi=b(p-E[p])+zi-η(pi-p) & bentuk lain (6.20) mjd ℓi=b(pi-p)+b(p-E[p]). Penyelesaian dua pers pi-p menghasilkan pi-p=zi/(η+b), shgdiperoleh pers Vr=Vz/(η+b)

Substitusi Vp dan Vr ke dalam b :

)28.6(

)1(

)(1

1

2

2

mz

z

Vb

bV

Vb

20


• Jika η=1, maka bentuk tertutup dari b adalah:

• Dari persamaan p=E[m]+[1/(1+b)](m-E[m]) dan ri=zi/(η+b) menunjukkan bahwa p dan ri adalah fungsi linear dari m dan zi.

)29.6(1

1

mz

z

VV

Vb

21


Model Lucas realisasi yg tidak terduga dari permintaan agregat mengakibatkan output yg lebih tinggi & harga yg lebih tinggi dari dugaan model menunjukkan hubungan positif antara output dan inflasi. Misal, m adl acak, sehingga:

Dimana u adl white noise. Bentuk ekspektasi dari mt adalah mt-1+c, dan komponen mt yg tidak diobservasi adl ut. Dari pers (6.26) dan (6.27) diperoleh:

)30.6(1 ttt ucmm

)31.6(1

11 ttt u

bcmp

)32.6(1

tt ub

by

22

)33.6(1

1

1

1

1

1

1)(

1

121

tt

ttttt

ub

ub

bc

ub

ub

mm

• Model menunjukkan bahwa pt-1=mt-2+c+[ut-1/(1+b)], tingkatinflasi (diukur sebagai perubahan level log harga), yaitu:

• Pers (6.32) dan (6.33) menunjukkan hubungan positif antara

output dan inflasi Kurva Phillips

• Kritik Lucas: Pergeseran dalam kebijakan yang mempengaruhiekspektasi dapat menyebabkan kegagalan hubungan diantaravariabel agregat (Ch. 5)

23

Kebijakan Stabilisasi

Hasil dari shock permintaan agregat yg tidakdiobservasi memberikan dampak riil: kebijakanmoneter dapat menstabilisasi output hanya jikapembuat kebijakan memiliki informasi yg tidak tersediautk lembaga swasta, misal tingkat bunga, tingkatpengangguran atau indeks indikator pemimpin tidakrelevan untuk ekonomi riil (Sargent dan Wallace, 1975)

Untuk melihat ini, maka permintaan agregat, m, harussama dgn m*+v, dimana m* adl variabel kebijakan dan vadl gangguan di luar kontrol pemerintah

Jika pemerintah mengobservasi variabel yg terkaitdengan v yg tidak diketahui publik, maka variabel inidapat digunakan untuk menstabilisasi output

merubah m* untuk meng-offset perubahan v ygmenunjukkan dugaan dasar informasi publik

24

25

Pertukaran output-inflasi dan variabilitas permintaan agregat

(dari Ball, Mankiw, dan Romer, 1988)

Perkembangan Inflasi dan Persentase Penganggurandi Indonesia, 2003-2009 (Fenomena Phillips Curve)

0

2

4

6

8

10

12

14

16

18

20

2003 2004 2005-12005-22006-12006-22007-12007-22008-12008-22009-1

Inflasi Unemployment 26

Kesulitan Yang Muncul

Model Lucas kurang lengkap dalam memberikanpenjelasan mengenai efek pergeseran permintaan agregat.

• Kesulitan pertama fluktuasi tenaga kerja dalam modelLucas, seperti pada model siklus bisnis (real-business-cycle model), muncul dari perubahan penawaran tenagakerja sbg respon thd perubahan dlm keuntungan daribekerja

• Kesulitan kedua asumsi informasi yg tdk sempurna.Dalam perekonomian modern, informasi berkualitastinggi mengenai perubahan harga hanya diumumkan dginstruksi yg jelas ketika terjadi hiperinflasi, individudapat memperkirakan pergerakan harga agregat dgtepat & biaya rendah.

27

RINGKASAN

Keterbatasan pengetahuan lebih memperhatikan isu ttgbagaimana orang2 membentuk harapan ttg masa depan.Harapan memegang peran penting dlm perekonomian krnmempengaruhi perilaku ekonomi.

Keyakinan Lucas perusahaan & individu akan mempelajariefek kebijakan pemerintah & mengubah perilaku u/mengimbangi setiap kebijakan pemerintah mendorongterbentuknya mazhab ekonomi klasik baru (abad 20)

Kesulitan pengembangan model imperfect informationmemprediksi keterkaitan fluktuasi tenaga kerja dan siklus bisnis(real-business-cycle model) serta menyangkut asumsi informasiyang tidak sempurna.

Kritik Lucas memberikan alternatif pengambil kebijakan utkmempertimbangkan ekspektasi & rasionalitas pelaku pasar.

28

Penerapan teori ekspektasi rasional sulit dilakukan di Indonesia, karena :

1. Variabel-variabel masa depan seperti pertambahan jumlah uang beredar di Indonesia tidak dapat diprediksi secara awal.

2. Tingkat pendidikan masyarakat Indonesia sangat heterogen

3. Secara geografis sangat luas & kemampuan akses masihminim

4. Mekanisme pasar bebas belum sepenuhnya diterapkan di Indonesia

5. Kebocoran ekonomi

6. Masih kuatnya variabel2 non ekonomi yang secara riil mempengaruhi makroekonomi.

29

Let’s now examine three prominent models of aggregate supply, roughly

in the order of their development. In all the models, some market

imperfection causes the output of the economy to deviate from its

classical benchmark. As a result, the short-run aggregate supply curve

is upward sloping, rather than vertical, and shifts in the aggregate

demand curve cause the level of output to deviate temporarily from

the natural rate. These temporary deviations represent the booms and

busts of the business cycle.

Although each of the three models takes us down a different theoretical

route, each route ends up in the same place. That final destination is a

short-run aggregate supply equation of the form…

Y = Y + (P-Pe) where > 0

OutputActual price level

positive constant:

an indicator of

how much

output responds

to unexpected

changes in the

price level.

Natural

rate of output

Expected

price level

This equation states that output deviates from its natural rate when the

price level deviates from the expected price level. The parameter

indicates how much output responds to unexpected changes in the price

level, 1/ is the slope of the aggregate supply curve.

The sticky-wage model shows what a sticky nominal wage implies for

aggregate supply. To preview the model, consider what happens to the

amount of output produced when the price level rises:

1) When the nominal wage is stuck, a rise in the price level lowers the

real wage, making labor cheaper.

2) The lower real wage induces firms to hire more labor.

3) The additional labor hired produces more output.

This positive relationship between the price level and the amount of

output means the aggregate supply curve slopes upward during the time

when the nominal wage cannot adjust.

The workers and firms set the nominal wage W based on the target real

wage w and on their expectation of the price level Pe. The nominal wage

they set is:

W = w Pe

Nominal Wage = Target Real Wage Expected Price Level

W/P = w (Pe/P)

Real Wage=Target Real Wage (Expected Price Level/Actual Price Level)

This equation shows that the real wage deviates from its target if the

actual price level differs from the expected price level. When the actual

price level is greater than expected, the real wage is less than its target;

when the actual price level is less than expected, the real wage is greater

than its target.

The final assumption of the sticky-wage model is that employment is

determined by the quantity of labor that firms demand. In other words,

the bargain between the workers and the firms does not determine the

level of employment in advance; instead, the workers agree to provide

as much labor as the firms wish to buy at the predetermined wage. We

describe the firms’ hiring decisions by the labor demand function:

L = Ld (W/P),

which states that the lower the real wage, the more labor firms hire and

output is determined by the production function Y = F(L).

Labor, L

Y = F(L)

Income, Output, Y

Labor, L

L = Ld (W/P)

Y=Y+(P-Pe)

An increase in the price level,

reduces the real wage for a given

nominal wage, which raises

employment and output and income.

The second explanation for the upward slope of the short-run aggregate

supply curve is called the imperfect-information model. Unlike the

sticky-wage model, this model assumes that markets clear-- that is, all

wages and prices are free to adjust to balance supply and demand. In this

model, the short-run and long-run aggregate supply curves differ because

of temporary misperceptions about prices.

The imperfect-information model assumes that each supplier in the

economy produces a single good and consumes many goods. Because the

number of goods is so large, suppliers cannot observe all prices at all

times. They monitor the prices of their own goods but not the prices of all

goods they consume. Due to imperfect information, they sometimes

confuse changes in the overall price level with changes in relative prices.

This confusion influences decisions about how much to supply, and it

leads to a positive relationship between the price level and output in the

short run.

Let’s consider the decision of a single wheat producer, who earns income

from selling wheat and uses this income to buy goods and services. The

amount of wheat she chooses to produce depends on the price of wheat

relative to the prices of other goods and services in the economy. If the

relative price of wheat is high, she works hard and produces more wheat.

If the relative price of wheat is low, she prefers to work less and produce

less wheat. The problem is that when the farmer makes her production

decision, she does not know the relative price of wheat. She knows the

nominal price of wheat, but not the price of every other good in the

economy. She estimates the relative price of wheat using her expectations

of the overall price level.

If there is a sudden increase in the price level, the farmer doesn’t know if it

is a change in overall prices or just the price of wheat. Typically, she will

assume that it is a relative price increase and will therefore increase the

production of wheat. Most suppliers will tend to make this mistake.

To sum up, the notion that output deviates from the natural rate when the

price level deviates from the expected price level is captured by:

Y = Y + (P-Pe)

A third explanation for the upward-sloping short-run aggregate supply

curve is called the sticky-price model. This model emphasizes that firms

do not instantly adjust the prices they charge in response to changes in

demand. Sometimes prices are set by long-term contracts between firms

and consumers.

To see how sticky prices can help explain an upward-sloping aggregate

supply curve, first consider the pricing decisions of individual firms

and then aggregate the decisions of many firms to explain the economy

as a whole. We will have to relax the assumption of perfect competition

whereby firms are price takers. Now they will be price setters.

Consider the pricing decision faced by a typical firm. The firm’s

desired price p depends on two macroeconomic variables:

1) The overall level of prices P. A higher price level implies that the

firm’s costs are higher. Hence, the higher the overall price level, the

more the firm will like to charge for its product.

2) The level of aggregate income Y. A higher level of income raises the

demand for the firm’s product. Because marginal cost increases at

higher levels of production, the greater the demand, the higher the

firm’s desired price.

The firm’s desired price is:

p = P + a(Y-Y)

This equations states that the desired price p depends on the overall

level of prices P and on the level of aggregate demand relative to its

natural rate Y-Y. The parameter a (which is greater than 0) measures

how much the firm’s desired price responds to the level of aggregate

output.

Now assume that there are two types of firms. Some have flexible prices:

they always set their prices according to this equation. Others have sticky

prices: they announce their prices in advance based on what they expect

economic conditions to be. Firms with sticky prices set prices according to

p = Pe + a(Ye - Ye),

where the superscript ‘e’ represents the expected value of a variable. For

simplicity, assume these firms expect output to be at its natural rate so

that the last term a(Ye - Ye), drops out. Then these firms set price so

that p = Pe. That is, firms with sticky prices set their prices based on what

they expect other firms to charge.

We can use the pricing rules of the two groups of firms to derive the

aggregate supply equation. To do this, we find the overall price level in the

economy as the weighted average of the prices set by the two groups.

After some manipulation, the overall price level is:

P = Pe + [(1-s)a/s](Y-Y)]

P = Pe + [(1-s)a/s](Y-Y)]

The two terms in this equation are explained as follows:

1) When firms expect a high price level, they expect high costs. Those

firms that fix prices in advance set their prices high. These high prices

cause the other firms to set high prices also. Hence, a high expected price

level Pe leads to a high actual price level P.

2) When output is high, the demand for goods is high. Those firms

with flexible prices set their prices high, which leads to a high price level.

The effect of output on the price level depends on the proportion of firms

with flexible prices. Hence, the overall price level depends on the

expected price level and on the level of output. Algebraic rearrangement

puts this aggregate pricing equation into a more familiar form:

where = s/[(1-s)a]. Like the other models, the sticky-price model says

that the deviation of output from the natural rate is positively associated

with the deviation of the price level from the expected price level.

Y = Y + (P-Pe)

Start at point A; the economy is at full employment Y and the

actual price level is P0. Here the actual price level equals the

expected price level. Now let’s suppose we increase the price

level to P1.

Since P (the actual price level) is now greater than Pe (the

expected price level) Y will rise above the natural rate, and we

slide along the SRAS (Pe=P0) curve to A' .

Remember that our new SRAS (Pe=P0) curve is defined by the

presence of fixed expectations (in this case at P0). So in terms

of the SRAS equation, when P rises to P1, holding Pe constant

at P0, Y must rise.

The “long-run” will be defined when the expected price level equals the actual price level. So, as price level

expectations adjust, PeP2, we’ll end up on a new short-run aggregate supply curve, SRAS (Pe=P2) at point

B.

Hooray! We made it back to LRAS, a situation characterized by perfect information where the actual price

level (now P2) equals the expected price level (also, P2).

Y = Y + (P-Pe)

Y = Y + (P-Pe)

Y = Y + (P-Pe)

In terms of the SRAS equation, we can see that as Pe catches up with P, that entire “expectations gap”

disappears and we end up on the long run aggregate supply curve at full employment where Y = Y.

SRAS (Pe=P2)

BP2A'

Y'

SRAS (Pe=P0)P

Output

AP0

LRAS*

Y

AD

AD'

P1

The Phillips curve in its modern form states that the inflation rate

depends on three forces:

1) Expected inflation

2) The deviation of unemployment from the natural rate, called

cyclical unemployment

3) Supply shocks

These three forces are expressed in the following equation:

= e (n) + n

Inflation Cyclical

Unemployment

Supply

Shock

Expected

Inflation

Ch

ap

ter

8: T

he N

atu

ral R

ate

of

Un

em

plo

ym

ent

and

the

Ph

illi

ps C

urve

© 2006 Prentice Hall Business Publishing Macroeconomics, 4/e Olivier Blanchard 43 of 34

The modified Phillips curve, also called the

expectations-augmented Phillips curve, or

the accelerationist Phillips curve

The equation above is an important relation for two reasons:

It gives us another way of thinking about the Phillips curve: as a relation between the actual unemployment rate ut, the natural unemployment rate un, and the change in the inflation rate

It also gives us another way of thinking about the natural rate of unemployment. The non-accelerating-inflation rate of unemployment, (or NAIRU), is the rate of unemployment required to keep the inflation rate constant.

t t t nu 1 ( ) u

t t 1

The Phillips-curve equation and the short-run aggregate supply equation

represent essentially the same macroeconomic ideas. Both equations

show a link between real and nominal variables that causes the

classical dichotomy (the theoretical separation of real and nominal

variables) to break down in the short run.

The Phillips curve and the aggregate supply curve are two sides of the

same coin. The aggregate supply curve is more convenient when

studying output and the price level, whereas the Phillips curve

is more convenient when studying unemployment and inflation.

To make the Phillips curve useful for analyzing the choices facing

policymakers, we need to say what determines expected inflation. A

simple often plausible assumption is that people form their expectations

of inflation based on recently observed inflation. This assumption is

called adaptive expectations. So, expected inflation e equals last year’s

inflation -1. In this case, we can write the Phillips curve as:

which states that inflation depends on past inflation, cyclical

unemployment, and a supply shock. When the Phillips curve is written in

this form, it is sometimes called the Non-Accelerating Inflation Rate of

Unemployment, or NAIRU.

The term -1 implies that inflation has inertia-- meaning that it keeps going

until something acts to stop it. In the model of AD/AS, inflation inertia

is interpreted as persistent upward shifts in both the aggregate supply

curve and aggregate demand curve. Because the position of the SRAS

will shift upwards overtime, it will continue to shift upward until

something changes inflation expectations.

= -1 (n) + n

The second and third terms in the Phillips-curve equation show the two

forces that can change the rate of inflation. The second term, (u-un),

shows that cyclical unemployment exerts downward pressure on inflation.

Low unemployment pulls the inflation rate up. This is called

demand-pull inflation because high aggregate demand is responsible for

this type of inflation. High unemployment pulls the inflation rate down.

The parameter measures how responsive inflation is to cyclical

unemployment. The third term, n shows that inflation also rises and falls

because of supply shocks. An adverse supply shock, such as the rise in

world oil prices in the 70’s, implies a positive value of n and causes

inflation to rise.

This is called cost-push inflation because adverse supply shocks are

typically events that push up the costs of production. A beneficial

supply shock, such as the oil glut that led to a fall in oil prices in the

80’s, makes n negative and causes inflation to fall.

un

Unemployment, u

e + n

In the short run, inflation and unemployment

are negatively related. At any point in time, a

policymaker who controls aggregate demand

can choose a combination of inflation and

unemployment on this short-run Phillips

curve.

un

Unemployment, u

LRPC (u=un)

5%

10%

SRPC (e=0%)

SRPC (e=10%)

SRPC (e=5%)

D

B C

E

Suppose there is an increase in the rate of growth of the money supply causing LM and AD to shift out

resulting in an unexpected increase in inflation. The Phillips curve equation = e – (u-un) + v implies

that the change in inflation misperceptions causes unemployment to decline. So, the economy moves to a

point above full employment at point B.

A

As long as this inflation misperception exists, the economy will

remain below its natural rate un at u'.

Let’s start at point A, a point of price stability (=0%) and full employment (u=un).

When the economic agents realize the new level of inflation, they

will end up on a new short-run Phillips curve where expected

inflation equals the new rate of inflation (5%) at point C, where

actual inflation (5%) equals expected inflation (5%).

Remember, each short-run Phillips curve is defined by the presence of fixed expectations.

If the monetary authorities opt to obtain a lower u again,

then they will increase the money supply such that is

10%, for example. The economy moves to point D, where

actual inflation is 10% but, e is 5%.

When expectations adjust, the

economy will land on a new SRPC, at

point E, where both and e equal

10%.u'

Rational expectations make the assumption that people optimally use all

the available information about current government policies, to forecast

the future. According to this theory, a change in monetary or fiscal

policy will change expectations, and an evaluation of any policy change

must incorporate this effect on expectations. If people do form their

expectations rationally, then inflation may have less inertia than it first

appears.

Proponents of rational expectations argue that the short-run Phillips

curve does not accurately represent the options that policymakers have

available. They believe that if policy makers are credibly committed to

reducing inflation, rational people will understand the commitment and

lower their expectations of inflation. Inflation can then come down

without a rise in unemployment and fall in output.

Our entire discussion has been based on the natural rate hypothesis.

The hypothesis is summarized in the following statement:

Fluctuations in aggregate demand affect output and employment only

in the short run. In the long run, the economy returns to the levels of

output,employment, and unemployment described by the classical model.

Recently, some economists have challenged the natural-rate hypothesis

by suggesting that aggregate demand may affect output and employment

even in the long run. They have pointed out a number of mechanisms

through which recessions might leave permanent scars on the economy

by altering the natural rate of unemployment. Hyteresis is the term

used to describe the long-lasting influence of history on the natural

rate.

the lucas imperfect information model...tidak ada trade-off jangka pendek ... output dan inflasi...

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