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Katie Barnes
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I agree with the people above. It is important to note that digital goods and services are everywhere you look, but their impact is hard to see in economic statistics, as one would except. There has to be some development in measuring technological services in the economy and its effect on GDP. What the MIT economist, Brynjolfsson acknowledges, that the information sector of the economy has hardly grown since the 1980's, despite the exponential growth and accessibility consumers have seen from companies such as Apple, Microsoft, Facebook, and twitter. I would have liked this article to discuss how these multi-billion dollar corporations' values are justified - such as recognition of advertising etc.
Toggle Commented Nov 19, 2013 on Link from Twitter at Jolly Green General
This article focuses on arguing that we must understand the MPC to design fiscal policy. Regarding fiscal stimulus packages that are created to counteract the recession, these efforts are successful depending on how consumers respond to fiscal policies and how the government finances stimulus packages. One option for fiscal reforms is to increase the tax burden of the rich. However, what is more favorable are realistic models with precautionary savings or liquidity constraints that feature heterogeneity in MPC. The example this article provides of the MPC of poor and wealthy households supports what we have discussed in class. That is, wealthier households will spend less of additional cash they receive, whereas poorer households exhibit a higher MPC. Through either government transfer or redistribution policy, which the article provides examples of, the government can predict consumption.
Paul Krugman along with many other liberal economists have advocated for increased inflation. Conservative economists have even spoken in support of higher inflation as a mode of stimulating government revenue and expenditures. 4% and 6% are the numbers being thrown around, in comparison to the targeted 2% now. The prospective numbers of inflation reducing the real value of debt, including "$13 trillion of mortgages and $12 trillion of government debt held by the public" seem promising. The article doesn't address the negative aspects of inflation, such as the decline of the standard of living if incomes do not keep up with inflation. Since a small amount of inflation is acceptable as long as it is managed, perhaps increasing to 4% would be all right, only if it were managed properly by the federal reserve.
I think that the possibility of people choosing to invest in their education is a good question to rise. However, wouldn't we see a correlating increase in college applications, high school enrollment rates, etc.? I understand that it may be too soon to see any of these results now, but in the future we will be able to use data to see if this is a reason why the unemployment rate decreases. I also think that the fact that the article focuses on 'less than a high school degree' is relevant, but not a key demographic to focus on. The US census reports that 85.3% or more of people in the United States are high school graduates or have further education, so this article is only considering less than 15% or less of the population. These numbers only increase over the decades, so a decrease now would be strange. The EPOP is another mode of measuring unemployment that is more straightforward in this article because it states that the EPOP has not changed, and therefore the decrease in unemployment is due to individuals leaving the labor market.
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Oct 23, 2013