Matt Bolen

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Economics for Business Librarians

• Matt Bolen
• Marisa Ramírez
• Emily Weiss

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Summary

• Introduction
• Economic Activity
• Monetary Policy
• Fiscal Policy
• Summary

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What is Economics?
Source Centre Productions, United Learning
Inc. Accessed from http//www.glynn.k12.ga.us/pga
lland/gembit/fifthsocial.html
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What is Economics?

• Social science concerned with the production,
  distribution, exchange, and consumption of goods
  and services
• Focused on the way individuals, businesses, and
  governments seek to achieve economic objectives
• Other fields of study also contribute to this
  knowledge
• Psychology, Ethics, History, Sociology, Politics

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Schools of Economic ThoughtA Brief Overview

• Classical Economics
• The dominant theory throughout 18th and 19th
  centuries
• Principle Belief pursuit of individual
  self-interest will in turn benefit the society
  the most as a whole
• Primarily non-regulatory
• Invisible Hand
• Laissez faire
• Economic equilibrium

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Schools of Economic ThoughtA Brief Overview

• Marxist
• Drawn from Classical economic assumptions
• Labor Theory of Value
• Value of goods and services is dependent on the
  value of the labor that produces them
• Predicted the collapse of capitalism

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Schools of Economic ThoughtA Brief Overview

• Keynesian Economics
• A response to Classical theory
• Dominated 30 years after WWII (Bishop, 148)
• Contends that market economies are not
  self-regulating
• Government interaction is necessary to stabilize
  economy
• Active government

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Schools of Economic ThoughtA Brief Overview

• Neo-Classical
• Developed in 1970s and 1980s from the Classical
  model
• Response to Keynesian Economics and the rising
  inflation of the 70s
• Revival led by the Chicago School (Milton
  Friedman)
• Assumes that prices and wages will adjust rapidly
  enough that price-wage equilibrium always exists

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Microeconomics

• The worms eye view (Heilbroner and Thurow)
• How buyers and seller behave in the marketplace
• Focuses on economic behavior of a household or
  firm
• Includes pricing, distribution, investment,
  supply and demand, market failures

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Macroeconomics

• The "bird's eye view" (Heilbroner and Thurow)
• The "analysis of prosperity and recession"
  (Heilbroner and Thurow)
• Includes National income, total consumption,
  investment, money supply, growth, inflation,
  unemployment

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Understanding Economic Activity

• Supply Demand
• In a competitive / free market, the interaction
  between the demand for and the supply of goods
  and services determines the prices charged for
  the goods and services
• Business Cycle
• Expansion in many types of economic activity
  followed by contractions in economic activity
• Economic Indicators shed light into business
  cycles

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Economic Indicators

• Leading Economic Indicators
• Unemployment, stock market prices, issuance of
  building permits, consumer expectations
  (sentiment)
• Index of Leading Indicators
• Index of items that generally swing up or down
  before the economy as a whole does
• Lagging Economic Indicators
• Prime interest rate, average length of
  employment, changes in prices of services
• Index of Coincident Indicators
• Measure of current condition of our economy

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Understanding Prices

• Inflation
• General upward movement of prices of most goods
  and services
• Results from price increases that do not
  correspond to improvements in quality
• Measures of Inflation
• Consumer Price Index (CPI)
• CPI-U (Urban workers)
• CPI-W (Wage/clerical workers)
• Producer Price Index (PPI)

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Monetary Policy A few important terms

• Currency
• Money
• Interest rate
• Monetarism

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What is monetary policy?

• Basically, it is the way a nation's central bank
  controls how much money is in the economy
• In the United States, the Federal Reserve Board
  sets monetary policy
• There are three ways to set monetary policy

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Federal Reserve System

• Has 7 members who are appointed to 14 year terms
  by the President and confirmed by the Senate
• Board of Governors is chaired by Allan Greenspan
• Sets monetary policy and oversees the U.S.
  banking industry
• Regulates consumer credit industry
• Oversees national check-clearing systems
• Twelve Federal Reserve districts which each have
  a Federal Reserve Bank

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What a couple!
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Three ways of setting monetary policy

• Open market operations
• Reserve requirements
• Discount rates

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Key Resources

• Print
• Ferris, Ken and Mark Jones. The Reuters Guide to
  Official Interest Rates 2nd ed. London Probus
  Publishing, Co., 1995
• McCusker, John. How Much is That in Real Money?
  A Historical Commodity Price Index for Use as a
  Deflator of Money Values in the Economy of the
  United States 2nd ed. Worcester, MA American
  Antiquarian Society, 2001.

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Key Resources

• In Plain English Making Sense of the Federal
  Reserve http//www.stlouisfed.org/publications/pl
  eng/

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Key Resources

• Federal Reserve websites have a wealth of
  information
• Federal Reserve Bulletin http//www.federalreserve
  .gov/pubs/bulletin/
• Fed in Print http//www.frbsf.org/publications/fed
  inprint/index.html
• Publications and Educational Resources
  http//www.federalreserve.gov/publications.htm

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Key Resources

• FRED II Economic Research from the St. Louis Fed
  http//research.stlouisfed.org/fred2/
• Federal Reserve Statistics Releases and
  Historical Data http//www.federalreserve.gov/rel
  eases/

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Fiscal Policy

• Use of taxation and government spending to
  influence the economy
• Types
• Easy fiscal policy
• Tight fiscal policy

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Fiscal Policy

• Outgrowth of Keynesian macroeconomics
• Prior to the Depression, budgets tended to be
  balanced and small
• Depression led economists to consider the use of
  policy to instigate economic recovery
• The basis for the Employment Act of 1946
• called for the Federal Govt to use all
  practical meansto promote maximum employment,
  production, and purchasing power.

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Fiscal Policy Key Terms

• Budget
• Budget deficit
• Deficit spending
• Budget surplus
• National Income Accounting
• GDP
• GNP
• Inflation
• Recession

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Quick Reference Sources

• Bannock, Graham, R.E. Baxter, and Evan Davis.
  The Penguin Dictionary of Economics. New York
  Penguin Books, 2003.
• Bishop, Matthew. Essential Economics. London
  The Economist in association with Profile Books,
  2004.
• Black, John. Oxford Dictionary of Economics.
  Oxford Oxford University Press, 2002.
• Cleaver, Tony. The Basics Economics. New York
  Routledge, 2004.
• Economics A-Z. 2005. The Economist.
  http//www.economist.com/research/Economics/alphab
  etic.cfm
• Eds. of Salem Press. Economics Basics.
  Pasadena Salem Press, Inc., 1999.
• Greenwald, Douglas, Ed. The McGraw-Hill
  Encyclopedia of Economics. New York
  McGraw-Hill, Inc., 1994.
• Resources for Economists on the Internet.
  http//www.aeaweb.org/RFE/
• Rutherford, Donald. Routledge Dictionary of
  Economics. New York Routledge, 2002.
• Shim, Jae K. and Joel G. Siegel. Dictionary of
  Economics New York John Wiley Sons Inc., 1995

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Conclusion

• So, how is this relevant to librarianship?