Macroeconomic Issues and Policy

1
Macroeconomic Issues and Policy

• Using the tools of macroeconomic analysis, we
  take up five issues in this chapter

1. The effects of the stock market in the economy
2. The way the Federal Reserve (Fed) reacts to the
   state of the economy
3. The lags in the economys response to monetary
   and fiscal policy changes
4. The legislation concerned with the federal
   government budget and
5. The cyclical behavior since 1980 of the economies
   of Japan and five European countries.

2
The Effects of the Stock Marketon the Economy

• One of the main components of household wealth is
  the value of stocks held by households.
• When stock prices rise, household wealth
  increases, and when stock prices fall, household
  wealth decreases.
• Stock prices affect the economy by affecting
  household wealth, which affects household
  consumption.

3
The Stock Market Crashof October 1987

• The stock market crash of October 1987
  represented a large drop in household wealth.
• In practice, after a 1.00 decrease in wealth,
  consumption seems to be lower in each future year
  by about four cents, or 4 percent of the decrease
  in wealth.
• The 1 trillion decrease in wealth in 1987
  implies a 40 billion lower level of consumption
  in 1988, or 1 percent of GDP.

4
The Stock Market Crashof October 1987

• The life-cycle theory of consumption predicts
  that households smooth their consumption over
  time.
• A decrease in wealth will not decrease
  consumption in the current year by the full
  amount of the decrease in wealth. Instead, they
  cut consumption a little each year.

5
The Stock Market Crashof October 1987

• The stock market crash of 1987 did not result in
  a recession in 1988 because households and
  business firms did not lower their expectations
  drastically.
• Because the initial decrease in wealth turned out
  to be temporary, the negative wealth effect was
  not nearly as large as it otherwise would have
  been.

6
The Stock MarketBoom of 1995 2000

• Highlights of the stock market boom of 1995
  2000 include the following

• It was by far the largest stock market boom in
  U.S. history.
• It added roughly 14 trillion to household
  wealth, about 2.5 trillion per year.
• About 1.7 of the 4.5 percent increase in the
  growth rate of real GDP was due to the stock
  market boom.

7
The Federal Reserves Response to the State of
the Economy

• The Fed is likely to increase the money supply
  during times of low output and low inflation.
• The opposite is also true The Fed is likely to
  decrease the money supply during times of high
  output and high inflation.
• Stagflation is a more difficult problem for the
  Fed.

8
The Feds Response toLow Output/Low Inflation

• When the economy is on the flat portion of the AS
  curve, an increase in the money supply will lead
  to an increase in output with very little
  increase in the price level.

9
The Feds Response toHigh Output/High Inflation

• When the economy is on the relatively steep
  portion of the AS curve, the Fed is likely to
  contract the money supply. This will lead to a
  decrease in the price level, with little decrease
  in output.

10
The Feds Response to Stagflation

• Stagflation is a more difficult problem to solve.
  

• If the Fed contracts the money supply, inflation
  will fall, but so will output.

• If the Fed expands the money supply, output will
  rise, but so will inflation.

11
The Behavior of the Fed During the 1990 1991
Recession

• After the Fed became convinced that a recession
  was at hand, it responded by engaging in open
  market operations to lower interest rates.
• Inflation was not a problem, so the Fed could
  expand the economy without worrying about
  inflationary pressures.

12
Data for Selected Variables for the 1989 2000
Period
Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period
QUARTER QUARTER REAL GDPGROWTHRATE () UNEMPLOYMENTRATE () INFLATIONRATE () THREE-MONTHT-BILL RATE AAABONDRATE FEDERALGOVERNMENTSURPLUS SURPLUS/GDP
1989 I 5.0 5.2 4.3 8.5 9.7 - 108.8 - 0.020
II 2.2 5.2 4.0 8.4 9.5 - 127.3 - 0.023
III 1.9 5.3 2.9 7.9 9.0 - 140.6 - 0.025
IV 1.4 5.4 3.1 7.6 8.9 - 143.4 - 0.026
1990 I 5.1 5.3 4.5 7.8 9.2 - 172.1 - 0.030
II 0.9 5.3 4.7 7.8 9.4 - 171.2 - 0.030
III - 0.7 5.7 3.9 7.5 9.4 - 164.6 - 0.028
IV - 3.2 6.1 3.5 7.0 9.3 - 184.0 - 0.031
1991 I - 2.0 6.6 4.7 6.1 8.9 - 160.1 - 0.027
II 2.3 6.8 2.9 5.6 8.9 - 213.4 - 0.036
III 1.0 6.9 2.5 5.4 8.8 - 234.7 - 0.039
IV 2.2 7.1 2.3 4.6 8.4 - 253.1 - 0.042
1992 I 3.8 7.4 3.1 3.9 8.3 - 288.3 - 0.047
II 3.8 7.6 2.2 3.7 8.3 - 291.8 - 0.046
III 3.1 7.6 1.3 3.1 8.0 - 316.5 - 0.050
IV 5.4 7.4 2.5 3.1 8.0 - 293.5 - 0.045
1993 I - 0.1 7.2 3.4 3.0 7.7 - 300.9 - 0.046
II 2.5 7.1 2.2 3.0 7.4 - 267.3 - 0.041
III 1.8 6.8 1.8 3.0 6.9 - 275.5 - 0.041
IV 6.2 6.6 2.3 3.1 6.8 - 253.0 - 0.037
1994 I 3.4 6.6 2.0 3.3 7.2 - 237.5 - 0.034
II 5.7 6.2 1.8 4.0 7.9 - 190.6 - 0.027
III 2.2 6.0 2.4 4.5 8.2 - 211.8 - 0.030
IV 5.0 5.6 1.9 5.3 8.6 - 209.2 - 0.029
13
Data for Selected Variables for the 1989 2000
Period
Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period
QUARTER QUARTER REAL GDPGROWTHRATE () UNEMPLOYMENTRATE () INFLATIONRATE () THREE-MONTHT-BILL RATE AAABONDRATE FEDERALGOVERNMENTSURPLUS SURPLUS/GDP
1995 I 1.5 5.5 3.0 5.8 8.3 - 208.2 - 0.029
II 0.8 5.7 1.7 5.6 7.7 - 189.0 - 0.026
III 3.1 5.7 1.8 5.4 7.4 - 197.5 - 0.027
IV 3.2 5.6 2.0 5.3 7.0 - 173.1 - 0.023
1996 I 2.9 5.6 2.5 5.0 7.0 - 176.4 - 0.023
II 6.8 5.5 1.4 5.0 7.6 - 137.0 - 0.018
III 2.0 5.3 1.9 5.1 7.6 - 130.1 - 0.017
IV 4.6 5.3 1.6 5.0 7.2 - 103.9 - 0.013
1997 I 4.4 5.3 2.9 5.1 7.4 - 86.5 - 0.011
II 5.9 5.0 1.9 5.1 7.6 - 68.2 - 0.008
III 4.2 4.8 1.2 5.1 7.2 - 33.8 - 0.004
IV 2.8 4.7 1.4 5.1 6.9 - 25.0 - 0.003
1998 I 6.5 4.7 1.0 5.1 6.7 26.0 0.003
II 2.9 4.4 1.2 5.0 6.6 41.9 0.005
III 3.4 4.5 1.5 4.8 6.5 72.1 0.008
IV 5.6 4.4 1.1 4.3 6.3 56.4 0.006
1999 I 3.5 4.3 2.3 4.4 6.4 89.8 0.010
II 2.5 4.3 1.4 4.5 6.9 117.4 0.013
III 5.7 4.2 0.9 4.7 7.3 147.3 0.016
IV 8.3 4.1 1.3 5.0 7.5 143.4 0.015
2000 I 4.8 4.1 3.3 5.5 7.7 236.0 0.024
II 5.2 4.0 2.5 5.7 7.8 244.9 0.025
Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index.
14
Data for Selected Variables for the 1989 2000
Period
Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period Data for Selected Variables for the 1989 2000 Period
QUARTER QUARTER REAL GDPGROWTHRATE () UNEMPLOYMENTRATE () INFLATIONRATE () THREE-MONTHT-BILL RATE AAABONDRATE FEDERALGOVERNMENTSURPLUS SURPLUS/GDP
1995 I 1.5 5.5 3.0 5.8 8.3 - 208.2 - 0.029
II 0.8 5.7 1.7 5.6 7.7 - 189.0 - 0.026
III 3.1 5.7 1.8 5.4 7.4 - 197.5 - 0.027
IV 3.2 5.6 2.0 5.3 7.0 - 173.1 - 0.023
1996 I 2.9 5.6 2.5 5.0 7.0 - 176.4 - 0.023
II 6.8 5.5 1.4 5.0 7.6 - 137.0 - 0.018
III 2.0 5.3 1.9 5.1 7.6 - 130.1 - 0.017
IV 4.6 5.3 1.6 5.0 7.2 - 103.9 - 0.013
1997 I 4.4 5.3 2.9 5.1 7.4 - 86.5 - 0.011
II 5.9 5.0 1.9 5.1 7.6 - 68.2 - 0.008
III 4.2 4.8 1.2 5.1 7.2 - 33.8 - 0.004
IV 2.8 4.7 1.4 5.1 6.9 - 25.0 - 0.003
1998 I 6.5 4.7 1.0 5.1 6.7 26.0 0.003
II 2.9 4.4 1.2 5.0 6.6 41.9 0.005
III 3.4 4.5 1.5 4.8 6.5 72.1 0.008
IV 5.6 4.4 1.1 4.3 6.3 56.4 0.006
1999 I 3.5 4.3 2.3 4.4 6.4 89.8 0.010
II 2.5 4.3 1.4 4.5 6.9 117.4 0.013
III 5.7 4.2 0.9 4.7 7.3 147.3 0.016
IV 8.3 4.1 1.3 5.0 7.5 143.4 0.015
2000 I 4.8 4.1 3.3 5.5 7.7 236.0 0.024
II 5.2 4.0 2.5 5.7 7.8 244.9 0.025
Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index. Note The inflation rate is the percentage change in the GDP price index.
15
The Behavior of the Fedin 1993 and 1994

• During this period, inflation was not a problem,
  so the Fed had room to stimulate the economy and
  kept its expansionary policy.
• By the end of 1993 the Fed was worried about
  inflation problems in the future, and decided to
  begin slowing down the economy.

16
The Behavior of the Fedin 1995 1997

• Inflation did not become a problem after 1994,
  and the Fed lowered interest rates.
• The three-month Treasury bill rate remained at
  roughly 5.0 percent throughout 1996 and 1997.
• During this period, the economy experienced good
  growth, low unemployment, low inflation, and a
  balanced government budget!

17
The Behavior of the Fedin 1998 2000

• Based on concerns about the Asian financial
  crisis, the Fed lowered the bill rate to 4.3
  percent in the fourth quarter of 1998.
• The Asian crisis did not affect the U.S. economy
  very much, and the Fed began raising the bill
  rate on fears that the economy might be
  overheating.

18
Lags in the Economys Response to Monetary and
Fiscal Policy

• Stabilization policy describes both monetary and
  fiscal policy, the goals of which are to smooth
  out fluctuations in output and employment and to
  keep prices as stable as possible.
• Time lags are delays in the economys response to
  stabilization policies.

19
Two Time Paths for GDP

• Path A is less stableit varies more over
  timethan path B. Other things being equal,
  society prefers path B to path A.

20
Stabilization The Fool in the Shower

• Attempts to stabilize the economy can prove
  destabilizing because of time lags.
• Milton Friedman likened these attempts to a fool
  in the shower. The shower starts out cold, so
  the fool turns up the hot water. Nothing happens
  right away, so he turns up the hot water further.
  Then, the hot water comes on and scalds him.
  And the same thing happens when he starts turning
  on the cold water.

21
Stabilization The Fool in the Shower

• An expansionary policy that should have begun to
  take effect at point A does not actually begin to
  have an impact until point D, when the economy is
  already on an upswing. Hence, the policy pushes
  the economy to points F and G (instead of F and
  G). Income varies more widely than it would have
  if no policy had been implemented.

22
Types of Lags

• The recognition lag refers to the time it takes
  for policy makers to recognize the existence of a
  boom or a slump.
• The implementation lag is the time it takes to
  put the desired policy into effect once
  economists and policy makers recognize that the
  economy is in a boom or a slump.
• The implementation lag for monetary policy is
  generally much shorter than for fiscal policy.

23
Types of Lags

• The response lag is the time it takes for the
  economy to adjust to the new conditions after a
  new policy is implemented the lag that occurs
  because of the operation of the economy itself.
• There is a delay in the multiplier process
  because neither individuals nor firms revise
  their spending plans instantaneously.

24
Government Budget Policy

• The Gramm-Rudman-Hollings Bill, passed by the
  U.S. Congress and signed by President Reagan in
  1986, is a law that set out to reduce the federal
  deficit by 36 billion per year, with a deficit
  of zero slated for 1991.
• In practice, these targets never came close to
  being achieved.

25
The Effects of Spending Cutson the Deficit

• A cut in government spending causes the economy
  to contract. Both the taxable income of
  households and the profits of firms fall.
• The deficit tends to rise when GDP falls, and
  tends to fall when GDP rises.

26
The Effects of Spending Cutson the Deficit

• The deficit response index (DRI) is the amount by
  which the deficit changes with a 1 change in
  GDP.
• If the DRI equals -.22, for example, the deficit
  rises by 0.22 billion for each 1 billion
  decrease in GDP.
• Spending cuts must be larger than the deficit
  reduction we wish to achieve.

27
Economic Stability andDeficit Reduction

• Congress has two options
• Choose a target deficit and adjust government
  spending and taxation to achieve this target, or
• Decide how much to spend and tax regardless of
  the consequences on the deficit.
• A negative demand shock is something that causes
  a negative shift in consumption or investment
  schedules or that leads to a decrease in U.S.
  exports.

28
Economic Stability andDeficit Reduction

• Automatic stabilizers refer to revenue and
  expenditure items in the federal budget that
  automatically change with the economy in such a
  way as to stabilize GDP.

29
Economic Stability andDeficit Reduction

• Without deficit targeting, an increase in the
  deficit caused by a negative demand shock
  provides an automatic stabilizer during
  contractions. Tax revenues decrease, and
  transfer payments rise.
• With deficit targeting, taxes could be rising or
  government spending declining while the economy
  is experiencing a contraction. Deficit targeting
  measures have undesirable macroeconomic
  consequences.

30
Deficit Targeting as anAutomatic Stabilizer
31
Business Cycles in Other Countries

• The overall performance of the Japanese economy
  was good until 1992, when the growth rate slowed
  considerably, and the unemployment rate rose.
• The Bank of Japan eased monetary policy. By
  1999, the short-term interest rate was
  essentially zero, but this monetary-policy
  stimulus was not sufficient to prevent the
  slowdown from lasting a number of years.

32
Business Cycles in Other Countries

• In the United Kingdom and other European
  countries, a pattern of low or negative growth in
  the early 1980s, and then again in the early
  1990s, has been accompanied by a fairly high
  level of unemployment.
• Some say that the prevalence of high unemployment
  rates is caused by generous social welfare
  benefits in Europeespecially unemployment
  benefits.

33
Data for Selected Variablesfor Six Countries,
1980 1999
Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999
GDPGROWTHRATE GDPGROWTHRATE GDPGROWTHRATE INFLATIONRATE INFLATIONRATE UNEMPLOYMENTRATE UNEMPLOYMENTRATE SHORT-TERMINTERESTRATE SHORT-TERMINTERESTRATE GDPGROWTHRATE GDPGROWTHRATE INFLATIONRATE INFLATIONRATE UNEMPLOYMENTRATE UNEMPLOYMENTRATE SHORT-TERMINTERESTRATE
United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Spain Spain Spain Spain Spain Spain Spain
1980 1980 -1.6 18.8 18.8 NA NA 15.2 15.2 2.2 13.4 13.4 NA NA 15.7 15.7
1981 1981 -1.3 11.4 11.4 NA NA 13.0 13.0 -0.1 12.6 12.6 NA NA 15.8 15.8
1982 1982 1.5 7.8 7.8 10.3 10.3 11.5 11.5 1.5 13.9 13.9 14.9 14.9 15.7 15.7
1983 1983 3.6 5.3 5.3 11.1 11.1 9.6 9.6 2.2 11.8 11.8 17.5 17.5 19.8 19.8
1984 1984 2.5 4.4 4.4 11.2 11.2 9.3 9.3 1.5 11.6 11.6 20.3 20.3 13.4 13.4
1985 1985 3.5 5.9 5.9 11.5 11.5 11.6 11.6 1.7 7.7 7.7 21.7 21.7 10.9 10.9
1986 1986 4.4 3.2 3.2 11.6 11.6 10.4 10.4 3.2 11.1 11.1 21.2 21.2 8.6 8.6
1987 1987 4.8 5.0 5.0 10.6 10.6 9.3 9.3 5.6 5.8 5.8 20.6 20.6 8.0 8.0
1988 1988 5.0 6.1 6.1 8.7 8.7 9.8 9.8 5.2 5.7 5.7 19.5 19.5 10.8 10.8
1989 1989 2.1 7.4 7.4 7.3 7.3 13.1 13.1 4.7 7.1 7.1 17.2 17.2 13.6 13.6
1990 1990 0.6 7.6 7.6 7.1 7.1 14.1 14.1 3.7 7.3 7.3 16.2 16.2 14.2 14.2
1991 1991 -1.5 6.7 6.7 8.9 8.9 11.0 11.0 2.3 7.1 7.1 16.4 16.4 12.5 12.5
1992 1992 0.1 4.0 4.0 10.0 10.0 8.9 8.9 0.7 6.9 6.9 18.4 18.4 12.4 12.4
1993 1993 2.3 2.8 2.8 10.5 10.5 5.2 5.2 -1.2 4.3 4.3 22.7 22.7 10.5 10.5
1994 1994 4.4 1.5 1.5 9.6 9.6 5.2 5.2 2.3 4.0 4.0 24.1 24.1 8.1 8.1
1995 1995 2.8 2.5 2.5 8.7 8.7 6.3 6.3 2.7 4.8 4.8 22.9 22.9 9.8 9.8
1996 1996 2.6 3.3 3.3 8.2 8.2 5.8 5.8 2.3 3.4 3.4 22.2 22.2 7.2 7.2
1997 1997 3.5 2.9 2.9 7.0 7.0 6.5 6.5 3.8 2.1 2.1 20.8 20.8 5.0 5.0
1998 1998 2.2 3.2 3.2 6.3 6.3 6.8 6.8 4.0 2.3 2.3 18.8 18.8 3.8 3.8
1999 1999 1.7 1.6 1.6 6.1 6.1 5.0 5.0 3.7 2.5 2.5 15.9 15.9 3.0 3.0
34
Data for Selected Variablesfor Six Countries,
1980 1999
Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999
GDPGROWTHRATE GDPGROWTHRATE GDPGROWTHRATE INFLATIONRATE INFLATIONRATE UNEMPLOYMENTRATE UNEMPLOYMENTRATE SHORT-TERMINTERESTRATE SHORT-TERMINTERESTRATE GDPGROWTHRATE GDPGROWTHRATE INFLATIONRATE INFLATIONRATE UNEMPLOYMENTRATE UNEMPLOYMENTRATE SHORT-TERMINTERESTRATE
France France France France France France France France France France Italy Italy Italy Italy Italy Italy Italy
1980 1980 1.3 11.7 11.7 NA NA 11.9 11.9 3.5 20.9 20.9 NA NA 15.9 15.9
1981 1981 0.6 12.0 12.0 NA NA 15.3 15.3 0.5 19.1 19.1 NA NA 19.7 19.7
1982 1982 2.2 12.1 12.1 7.7 7.7 14.9 14.9 0.5 17.0 17.0 6.4 6.4 19.4 19.4
1983 1983 0.8 9.6 9.6 8.1 8.1 12.5 12.5 1.2 15.1 15.1 7.5 7.5 17.9 17.9
1984 1984 1.3 7.5 7.5 9.7 9.7 11.7 11.7 2.6 11.6 11.6 8.0 8.0 15.4 15.4
1985 1985 1.8 5.8 5.8 10.1 10.1 9.9 9.9 2.8 9.0 9.0 8.3 8.3 13.7 13.7
1986 1986 2.4 5.3 5.3 10.2 10.2 7.7 7.7 2.8 7.8 7.8 9.0 9.0 11.4 11.4
1987 1987 2.2 3.0 3.0 10.4 10.4 8.0 8.0 3.1 6.1 6.1 9.8 9.8 10.7 10.7
1988 1988 4.2 3.1 3.1 9.8 9.8 7.5 7.5 3.9 6.8 6.8 9.8 9.8 11.1 11.1
1989 1989 4.1 3.2 3.2 9.3 9.3 9.1 9.1 4.9 6.5 6.5 9.8 9.8 12.6 12.6
1990 1990 2.6 2.9 2.9 9.0 9.0 9.9 9.9 2.0 8.2 8.2 9.0 9.0 12.4 12.4
1991 1991 1.0 3.0 3.0 9.5 9.5 9.5 9.5 1.4 7.6 7.6 8.6 8.6 12.5 12.5
1992 1992 1.5 2.0 2.0 10.4 10.4 10.4 10.4 0.8 4.5 4.5 8.8 8.8 14.3 14.3
1993 1993 -1.0 2.4 2.4 11.7 11.7 8.8 8.8 -0.9 3.9 3.9 10.3 10.3 10.6 10.6
1994 1994 2.0 1.8 1.8 12.3 12.3 5.7 5.7 2.2 3.5 3.5 11.2 11.2 9.2 9.2
1995 1995 1.7 1.7 1.7 11.7 11.7 6.4 6.4 2.9 5.0 5.0 11.6 11.6 10.9 10.9
1996 1996 1.1 1.4 1.4 12.4 12.4 3.7 3.7 0.9 5.2 5.2 11.7 11.7 8.5 8.5
1997 1997 2.0 1.4 1.4 12.3 12.3 3.2 3.2 1.5 2.6 2.6 12.0 12.0 6.3 6.3
1998 1998 3.3 0.8 0.8 11.8 11.8 3.4 3.4 1.3 2.8 2.8 11.9 11.9 4.6 4.6
1999 1999 2.4 0.6 0.6 11.3 11.3 2.7 2.7 1.0 1.7 1.7 11.3 11.3 2.9 2.9
35
Data for Selected Variablesfor Six Countries,
1980 1999
Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999 Data for Selected Variables for Six Countries, 1980 - 1999
GDPGROWTHRATE GDPGROWTHRATE GDPGROWTHRATE INFLATIONRATE INFLATIONRATE UNEMPLOYMENTRATE UNEMPLOYMENTRATE SHORT-TERMINTERESTRATE SHORT-TERMINTERESTRATE GDPGROWTHRATE GDPGROWTHRATE INFLATIONRATE INFLATIONRATE UNEMPLOYMENTRATE UNEMPLOYMENTRATE SHORT-TERMINTERESTRATE
Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Japan Japan Japan Japan Japan Japan Japan
1980 1980 1.0 5.0 5.0 2.6 2.6 7.9 7.9 2.8 5.4 5.4 2.0 2.0 10.9 10.9
1981 1981 0.1 4.2 4.2 4.0 4.0 10.4 10.4 3.2 4.1 4.1 2.2 2.2 7.4 7.4
1982 1982 -0.9 4.4 4.4 5.7 5.7 8.3 8.3 3.1 1.8 1.8 2.4 2.4 6.9 6.9
1983 1983 1.8 3.2 3.2 6.9 6.9 5.6 5.6 2.3 1.8 1.8 2.7 2.7 6.4 6.4
1984 1984 2.8 2.1 2.1 7.1 7.1 5.9 5.9 3.9 2.6 2.6 2.7 2.7 6.1 6.1
1985 1985 2.0 2.1 2.1 7.2 7.2 5.0 5.0 4.4 2.1 2.1 2.6 2.6 6.5 6.5
1986 1986 2.3 3.2 3.2 6.5 6.5 3.9 3.9 2.9 1.7 1.7 2.8 2.8 4.8 4.8
1987 1987 1.5 1.9 1.9 6.3 6.3 3.3 3.3 4.2 0.1 0.1 2.8 2.8 3.5 3.5
1988 1988 3.7 1.5 1.5 6.2 6.2 3.6 3.6 6.2 0.7 0.7 2.5 2.5 3.6 3.6
1989 1989 3.6 2.4 2.4 5.6 5.6 6.3 6.3 4.8 2.0 2.0 2.3 2.3 4.9 4.9
1990 1990 5.7 3.2 3.2 4.8 4.8 8.1 8.1 5.1 2.3 2.3 2.1 2.1 7.2 7.2
1991 1991 5.1 3.9 3.9 4.2 4.2 8.3 8.3 3.8 2.7 2.7 2.1 2.1 7.5 7.5
1992 1992 2.2 5.0 5.0 4.5 4.5 8.3 8.3 1.0 1.7 1.7 2.2 2.2 4.6 4.6
1993 1993 -1.1 3.7 3.7 7.9 7.9 6.2 6.2 0.3 0.6 0.6 2.5 2.5 3.1 3.1
1994 1994 1.2 3.7 3.7 8.4 8.4 5.1 5.1 0.6 0.2 0.2 2.9 2.9 2.2 2.2
1995 1995 2.9 0.8 0.8 8.2 8.2 4.4 4.4 1.5 -0.6 -0.6 3.1 3.1 1.2 1.2
1996 1996 0.8 1.0 1.0 8.9 8.9 3.4 3.4 5.0 -1.4 -1.4 3.4 3.4 0.5 0.5
1997 1997 1.5 0.8 0.8 9.9 9.9 3.3 3.3 1.4 0.1 0.1 3.4 3.4 0.5 0.5
1998 1998 2.2 1.0 1.0 9.4 9.4 3.4 3.4 -2.8 0.3 0.3 4.1 4.1 0.4 0.4
1999 1999 1.3 0.6 0.6 8.7 8.7 2.9 2.9 1.4 0.0 0.0 4.7 4.7 0.1 0.1
Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF. Source Organization for Economic Cooperation and Development (OECD) and IMF.