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MONETARISM These authors will consider the amount of money in an economy is the key factor and, therefore, the principal policy will be to develop monetary policy, which will control the amount of money in the economy . The author was more important monetarist Friedman, who developed his writing in the "Chicago School". The studies will be developed will seek to control the amount of money, and this is based on the direct control of the price level. It will support the "Quantity theory of money" (MXV = PXT). Relevant Questions: monetarism believe in long-term benefits of a competitive economic system and limited government intervention. State control will ensure the stability of the value of money. Blocks Study: Global Monetarism(Mundell, Johnson) is explained in the internationalization that occurs in the economies, which means that in a system of fixed exchange rates are determined by the rate of inflation of small economies, depending on price developments in the countries most influential. In this situation we recommend the use of flexible exchange rates to control prices through monetary policy. Monetarism Prosecutor's going to reflect the impact that has the budget deficit on money supply and therefore on the price level. Opposition to a discretionary intervention (leave power in the decision of the politicians) in the economy and, conversely, will defend the use of rules in the economy. Flexible exchange rates. The PM formal fight inflation. New classical macroeconomics (Rational Expectations) Advocates of this theory of rational expectations are going to leadthat operators will develop maximizadota rational behavior and their interests, so they will not repeat past mistakes. The information is costly and needs to be used efficiently. Discretionary economic policy is ineffective if not based on a series of surprise measures. We will highlight the contribution of Luke, who defended the circular causation between the present and future. In many cases, economic policy is inconsistent from a time perspective, ie is in a situation where economic policy is optimal at the time of its design, but it becomes suboptimal in the future. These authors believe that deception is an instrument of economic policy, and that the government deceived the public for their own good. ECONOMICS OF CHAOS. Techniques are quite complex to design economic policy. They believe that the economy is a very complex system, the mathematics of chaos and order and clarifying this complexity. A set of mathematical techniques used to study the behavior of complex processes, these being those in which the whole is greater than the sum of its parts.GAME THEORY: Situations where from a set of rules, players try to obtain optimum results and the final status of each player depends on the actions of all players. Strategic analysis of the confrontation between Government and traders carried the public system. Games once: They are used to consider the outcome of particular economic policies. Games with repetition or superuegos: Enter the time and therefore the decisions made in this will be conditioned with other measures taken earlier.


monetary policy: direct government action to modify the amount of money in circulation or the cost of money. It aims to stabilize inflation / / It works by some instruments, instruments and acts on an intermediate target that goal is acting on the ultimate goalInstruments: Monetary Base: assets + cash cash bank open market operations of central banks: The purchase and sale by the central bank bonds, formerly of gold and currency. Double effect: The amount and cost amount Effect: buy bonds, increases the demand for bonds, the government pays to banks for the purchase of bonds injects liquidity increases the money in the economy and increases aggregate demand / / An expansionary policy decreases unemployment. When we sell bonds, the relative supply increases, withdrew money in circulation, reduces aggregate demand, thus competing inflation to price stability cost effect: r = z x100 / k: r: effective interest rate, z: nominal interest rate, k: quote / / The prices are very high, the profitability is lower / / Ahem: buy bonds, the demand increases the price of that asset, its stock price, the effective interest rate under an expansionary policy / / If you sell bonds, increases supply, the price of the asset and its price low and increases the effective interest rate, reduces investment, restrictive policy / / The advantage of these tools is to support changes in directionOperations on the base interest rate: Increase the interest is a restrictive policy, curb investment and improve the stability of prices / / If we lower the interest hamper economic activity and improve the unemployment / / 1) there are sometimes these do not are spread rapidly in the financial sector / / 2) elasticity of demand to changes in interest investment. Coefficient of Style: The minimum reserves are the minimum reserves banks / / If we reduce the coefficient of cash, the companies can sell more and provide liquidity to the economy, increases demand. Expansive. If we increase the reserve requirement is a restrictive policy Other instruments: Government Policy credits: bank credit to different groups (farmers, builders Policy ...)// maximum interest rate: establishing a legal maximum / / Politics consumer creditFiscal policy: government action to manage the R and G public. It develops in the 30s, Keynes is the great driver. It seeks to act on aggregate demand / / y = C + I + G + (XM) / / expansion: increased spending, lower t; restrictive: low G, increases t / / the consumption function: C = Co + G (y -t + transfers / / multipliers exist for expenditure for taxes and transfers; dy = 1 / (1-C); -c/1-c dy, dy = c/1-c Stabilizers: fiscal mechanisms for which the economy adjusts automatically without discretionary intervention of the government / / Assume a situation of expansion, we assume a progressive tax system "increase T> increase and" automatically slows the growth / / / An increase in growth and income increases employment, so automatically the economy slows and stabilizes / /Deficit or surplus assets: when the government intervenes, the costs are higher deficit on investment liabilities: when is the result of automatic stability, the government does not intervene Delay tax: the tax system prevents the economy forward, stops him. If the cyclical elasticity of the fiscal aspects are impeding the economy achieve high balance / / We reached a salary and the more we win the personal income tax takes away money that does not encourage / / Solution: returning the circular correinte excessive income tax returns * * get subsidies to lower taxes Budget constraint: expenditures can not exceed the revenue GT = Tr + (Ht-Ht-1) + (Bt-Bt-1), B = debt; H: creation of money, T = taxes / / today banks can not create money, only the central bank alternativesAlternatives to stabilization policy: 1) develop increased spending funded by tax d AG = AT; AB = AH = 0 2) Public deficit financed by borrowing GT = AB, AH = 0 3) Public deficit financed creacción money. Now not possible GT = AH, AB = 0 4) mixed-financed public deficits and debt money creation GT = AB + AH 5) open market operations to deficit ac / p =- AB AH Globalization and the coordination of eco pol : Globalization is accelerating global integration of economies through production, trade, financial flows, technology diffusion, networks and information flows d / cultural / anthropological terms we can say in the consolidation of universal homo homos detrimental to tribal / / Metaphor: antelopes are frightened by the presence of the lion (real crisis in the real economy) or the leaf movement by wind (generated by speculative panic in the herd)approaches to the concept of globalization: * greater freedom of capital movement, especially of money-capital * echo interdependence of national production relocation * * development of transnational companies have no q q overcome barriers such as multinational or intrnacionales * loss of autonomy national policies d * d loss of credibility in some markets.

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