多恩布什宏观经济学第十版英文原版i19revised

CHAPTER 19BIG EVENTS: THE ECONOMICS OF DEPRESSION, HYPERINFLATION, AND DEFICITSChapter OutlineThe Gr

CHAPTER 19 BIG EVENTS: THE ECONOMICS OF DEPRESSION, HYPERINFLATION, AND DEFICITS Chapter Outline ● The Great Depression and its impact on macroeconomics ● Money and inflation ● Monetarism and the rational expectations approach ● The effects of hyperinflation ● Disinflation and the sacrifice ratio ● Credibility ● The Fed's dilemma ● Deficits, money growth, and seigniorage ● The inflation tax ● Federal government outlays and revenues ● The primary deficit ● The debt-to-income ratio ● The burden of the debt ● Financing Social Security Changes from the Previous Edition The material in this chapter was in Chapter 18 in the previous edition. It has been updated, Boxes 19-2 and 19-5 have been added, and other boxes have been renumbered accordingly. Introduction to the Material The Great Depression in the 1930s presented an economic crisis of enormous proportions. Between 1929 and 1933, real GDP in the U.S. fell by almost 30% and unemployment reached an all-time high of almost 25%. While the economy grew fairly rapidly from 1933-37, unemployment remained in the double digit range. In 1937/38, there was another major recession and the unemployment rate remained above 5% until 1942. In the 1930s unemployment averaged 18.8%, but by 1939 real GDP had recovered to its 1929 level. The classical economists of the time were not equipped to explain the existence of such substantial and persistent unemployment or to prescribe policies to deal with it. Only in 1936, in The General Theory of Employment, Interest and Money John Maynard Keynes’ book ,was a macroeconomic theory introduced upon which policies to keep the economy out of future recessions could be based. Keynes’ theory provided an explanation of what had happened during the Great Depression and suggested policies that might have prevented it. The stock market crash of 1929 is often seen as the catalyst for the Great Depression but, in fact, economic activity actually started to decline even before the crash. What might well have been an average recession turned into avery severe depression due to the inept economic 393