...Role of Aggregate Demand and Supply Shocks in a Low-Income Country: Evidence from Bangladesh Omar H.M.N. Bashar The Journal of Developing Areas, Volume 44, Number 2, Spring 2011, pp. 243-264 (Article) Published by Tennessee State University College of Business DOI: 10.1353/jda.0.0095 For additional information about this article http://muse.jhu.edu/journals/jda/summary/v044/44.2.bashar.html Access Provided by Bangladesh University of Professionals at 05/29/11 5:42AM GMT THE ROLE OF AGGREGATE DEMAND AND SUPPLY SHOCKS IN A LOW-INCOME COUNTRY: EVIDENCE FROM BANGLADESH Omar H.M.N. Bashar Deakin University, Australia ABSTRACT This paper explores the relative role of aggregate demand and supply shocks in affecting the output level and inflation rate in a low-income country vulnerable to various economic shocks. The study uses Bangladesh data, and following Cover et al (2006), employs a modification of the BlanchardQuah (BQ) approach, in which the two shocks are allowed to be correlated. Strong evidence is found for the hypothesis that aggregate demand and supply shocks are interrelated in Bangladesh. For the case in which causality is assumed to be running from demand to supply shocks, it was found that an independent supply shock plays significant role for fluctuations in inflation, which was absent in the standard BQ model. The results suggest that a tightening of monetary policy may lead to an adverse effect on the long-run growth potential and some supply-side policies...
Words: 8517 - Pages: 35
...focus on fundamental concepts and indicators of the macroeconomy. The main topics uncovered for this week include aggregate demand, aggregate supply, the Keynesian Model, and the Classical Model. You have an opportunity to explore these concepts in the Learning Team Weekly Reflection, the Fundamentals of Macroeconomics Paper, and the discussion topic. Aggregate Demand and Supply Models OBJECTIVE: Analyze the impact of various factors on aggregate demand and supply. Resource: Ch. 10 of Macroeconomics. Content • Ch. 10: “The Aggregate Demand/Aggregate Supply Model” o The Historical Development of Modern Macro o The AS/AD Model o The Aggregate Demand Curve o The Short-Run Aggregate Supply Curve o The Long-Run Aggregate Supply Curve o Equilibrium in the Aggregate Economy o Why Macro Policy Is More Complicate Than the AS/AD Model Makes It Look OBJECTIVE: Evaluate the effectiveness of changes in fiscal policies using Keynesian and Classical models Resource: Ch. 12 of Macroeconomics. Content • Ch. 12: “Thinking Like a Modern Macroeconomist” o Why It Is Important to Know about Modern Macro Theory o Engineering Models and Scientific Models o From the Keynesian Revolution to Modern Macro Models o A Beginner’s Guide to the DSGE Model o Policy Implications of the DSGE Model o How Relevant Are the Problems? o Modern Macroeconomic Policy and the Collapse of the Tacoma Narrows Bridge ...
Words: 267 - Pages: 2
...– Week Course Outline Please see theStudent Handbook to reference the University’sgrading scale. Table of Contents Week Topic(s) Learning Objective(s) Reading(s) Assignment(s) 1 Introduction to Macroeconomics • LO 1: Describe the characteristics of demand and supply, and apply the demand and supply model. • LO 2: Define real gross domestic product and identify the phases of a business cycle. • LO 3: Define inflation and deflation, and explain how each affects the price and economic growth of an economy. • LO 4: Articulate why the price-level changes and how it can affect economic stability. • LO 5: Explain how unemployment is calculated and measured in the United States. • LO 6: Demonstrate an understanding of the role of the government in the economy. • LO 7: Identify the components of the macroeconomy and relate them to the circular flow diagram. Describe the characteristics of demand and supply, and apply the demand and supply model. Unit 1 http://www.saylor.org/courses/econ102/ DQ1: Self Introduction and Understanding Plagiarism. DQ2: The three primary concerns in macroeconomic analysis. Please submit your responses to DQ1 and DQ2 to the Forum Section. 2 Measuring Aggregate Output • LO 8: Describe the measurement of GDP using the expenditure approach and the income approach. • LO 9: Explain the other measures of output and income and learn their distinction from one another. • LO 10: Distinguish between the real and nominal values. ...
Words: 1407 - Pages: 6
...– Week Course Outline Please see theStudent Handbook to reference the University’sgrading scale. Table of Contents Week Topic(s) Learning Objective(s) Reading(s) Assignment(s) 1 Introduction to Macroeconomics • LO 1: Describe the characteristics of demand and supply, and apply the demand and supply model. • LO 2: Define real gross domestic product and identify the phases of a business cycle. • LO 3: Define inflation and deflation, and explain how each affects the price and economic growth of an economy. • LO 4: Articulate why the price-level changes and how it can affect economic stability. • LO 5: Explain how unemployment is calculated and measured in the United States. • LO 6: Demonstrate an understanding of the role of the government in the economy. • LO 7: Identify the components of the macroeconomy and relate them to the circular flow diagram. Describe the characteristics of demand and supply, and apply the demand and supply model. Unit 1 http://www.saylor.org/courses/econ102/ DQ1: Self Introduction and Understanding Plagiarism. DQ2: The three primary concerns in macroeconomic analysis. Please submit your responses to DQ1 and DQ2 to the Forum Section. 2 Measuring Aggregate Output • LO 8: Describe the measurement of GDP using the expenditure approach and the income approach. • LO 9: Explain the other measures of output and income and learn their distinction from one another. • LO 10: Distinguish between the real and nominal values. ...
Words: 1407 - Pages: 6
...Executive Summary The topic of this paper is mainly discussed on the causes of inflation by explaining how the sustained inflation occurs as well as the role of played by monetary policy in the inflation process. The author in this paper agreed that sustained inflation is always and everywhere a monetary phenomenon and this has been agreed by both monetarist and Keynesian assumption. Besides that, the author also mentioned that we need to understand why inflationary monetary policy occurs. This paper also examines the inflation issue faced by United States and accommodating policy which has been used in order to achieve high employment target. Contractually, expectation is an important element in the anti-inflation policy to minimize the cost and output loss due to unemployment. Thus, a non-accommodating policy may be optimal to prevent the sustained inflation. The structure of this working paper began with executive summary followed by the assumptions of the paper and key concepts as well as the empirical evidence provided by the author. The author also provides some suggestions on how the monetary policy can be conducted to deal with the inflation process. Background/Assumptions of the paper Frederic S. Mishkin, the author of the working paper of ‘The Causes of Inflation’ is currently teaching at the Columbia Business School since 1983. This working paper was published in September, 1984 in National Bureau of Economic Research. He is also...
Words: 1998 - Pages: 8
...Discuss the relationship between supply chain and the supply and demand model. Over the past four weeks we have learned many important lesions and gained many tools to help us in all of our future endeavors. Some of the things that we have learned about are, aggregate demand and aggregate supply models, economic forecast data, historical economic data, interest rates, money supply, and the Federal Reserve. These topics are key in understanding the concepts of the fundamentals of macroeconomics. This week’s learning team reflection will discuss the topic of the supply chain and its relationship to the supply and demand model. This paper will explain and discuss each of the topics and how they relate to each other and how they work together. The objective of this paper is to help give the readers an improved understanding of the two concepts and their relationship. Supply Chain and Demand Model A Supply Chain is a network of companies and services that have products available to consumers. “Historically, the three fundamental stages of the supply chain; procurement, production and distribution, have been managed independently” (Thomas & Griffin, 1996, p. 1). The supply chain gets a good or service from the supplier to the consumer. Goods are often produced anywhere in the world, and the supply chain management makes them available to us locally so we don’t have to travel far to purchase a foreign car, a pair of jeans or a cup of coffee. They make sure we...
Words: 355 - Pages: 2
...Aggregate Demand and Supply Models Renee Chaplin, Angel Cole, Tamara Northern, Katrina Schreiber, Ryan Shaw ECO/372 November 3, 2014 Alexander Heil Aggregate Demand and Supply Models In order to have a strong economy, you have to have certain elements to keep the U. S. economy going. This paper will discuss four different elements that affect our U. S. economy today. Those four elements are unemployment, expectations, consumer income, and interest rates. The unemployment rate in the United States last week according to Trading Economics was 5.9, where as the highest it has ever been was 10.80, and 7.2 last year this time. (Trading Economics, 2014) Although these numbers sound good that is still a lot of people and every person out of work is hurting the economy. The longer a person is out of work the harder it is for them to find employment. “Unemployment negatively impacts the federal government’s ability to generate income and also tends to reduce economic activity.” (Hamel & Media, 2014) The higher the unemployment rate the more effect it has on aggregate demand and supply. If millions of people are out of work then they are apt to spend less money therefore there is less of a demand for the supply, which in the long run continues the ill effects on the economy. Fiscal Policies are how the government tries to make amends to the economy in times of hardship. The government can lower taxes or offer public work programs to lessen the effect on the unemployed. This...
Words: 1523 - Pages: 7
...ECO 372 Course Syllabus Course Description This course provides students with the basic theories, concepts, terminology, and uses of macroeconomics. Students learn practical applications for macroeconomics in their personal and professional lives through assimilation of fundamental concepts and analysis of actual economic events. Policies Faculty and students will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin. All electronic materials are available on the student website. Week One: Fundamentals of Macroeconomics | | Details | Due | Points | Objectives | 1.1 Explain the economic interaction of resources among households, government, and business. 1.2 Describe gross domestic product, inflation rate, unemployment rate, and interest rate. 1.3 Identify sources of historical economic data and economic forecasts. | | | Reading...
Words: 1726 - Pages: 7
...Introduction of China economics…………………………………………..…..….4 Summary of article…………………………………………………………………...….4 Aggregate supply (AS) models……………………………………………………..…5 Aggregate demand (AD) models………………………………………………..….....6 Government policies to overcome above problems and effectiveness…………7 Conclusion…………………………………………………………………………………..8 Reference list…………………………………………………………………………………9 Introduction of China economics China’s economy is rapidly huge and expanding in these years. It is the fourth largest country in area after Russia, Canada and USA has experienced multifarious changes in its economic system which has seen it become the second largest economy in the world after USA if measured on the Purchasing Power Parity (PPP) scale. However, China still considered as an emerging economy as per capita incomes fall in the lower-middle level, China is making its presence felt in the global stage by taking big strides in opening up its economy to international trade. There are many economic problems faced by China during the years. And the inflation has become a serious challenge for the developing economy; the surplus of population and the rising unemployment rate and price. According to statistics, more than 250 million migrant workers and their dependents had removed to urban areas to find work. Hence, as China’s economy slows down due to falling external and internal demand, a number of 6.8 million new college graduates poured in to the job market in 2012, China’s unemployment...
Words: 2038 - Pages: 9
...Jahangirnagar University Institute of Business Administration Essay On The Standard Supply & Demand Model and The Aggregate Supply & Demand Model Course: BUS 209-Macroeconomics Submitted to: Dr. Shuddhasattwa Rafiq Director and Associate Professor Institute of Business Administration Jahangirnagar University Submitted by: Md. Nahid Alam Class ID: 2368 (21st batch) Institute of Business Administration Jahangirnagar University Date of Submission: 11-06-2013 Essay On The Standard Supply & Demand Model and The Aggregate Supply & Demand Model June 11, 2013 Dr. Shuddhasattwa Rafiq Director and Associate Professor Institute of Business Administration Jahangirnagar University Savar, Dhaka-1342. Subject: Essay Submission. Sir It’s my immense pleasure to submit the essay on “The Standard Supply & Demand Model and The Aggregate Supply & Demand Model” that you have assigned me at the beginning of this semester. Submitting this essay is the partial fulfillment of this particular course. I believe that this essay will help to understand supply and demand, how supply and demand curves derive in microeconomics & macroeconomics and what determines the slopes of supply and demand curves. Thank you for giving the opportunity to prepare this report. It was really a wonderful experience. I hope you find this essay satisfactory. Sincerely, ------------------------- TABLE OF CONTENTS Context Name | Page...
Words: 4888 - Pages: 20
...Economic Advisement Paper: Option 1 ECO/372 September 15, 2014 The United States economy is currently recovering from a recession that occurred in 2007. While this society is on a steady incline to forget what happened, it was a traumatic time for many Americans. As economic advisors, it is critical to evaluate factors such as unemployment, expectations, consumer income, and interest rates. By analyzing these elements, we are able to determine how each affects aggregate supply and demand. We also developed a set of recommendations for the U.S. president regarding government spending and taxes based on the economic factors’ current state. This will help to better understand all concerns and improvements that should be considered. Unemployment is a key issue many in the US wants confronted. Although the unemployment rate has lowered recently, as of August 2014, it stands at 6.1 percent, a decrease of .5 percent from January 2014 (“United States Department of Labor,” 2014). Records show that each year, since 2009, when the average unemployment rate was 9.2, it has steadily decreased, where at the end of 2013, the average unemployment rate for the year was 7.3, (“United States Department of Labor,” 2014). The reason these numbers are important is because unemployment is directly linked to the state of the economy and aggregates supply and demand. When people are unemployed, they have less money to spend and will most likely hoard their money instead of spending it on...
Words: 1508 - Pages: 7
...Fundamentals of Macroeconomics Paper Kimberly Gay, Janine Lewis, Rosalyn O’Brien, Vicente Rodriguez, Marie Watts ECO/372 January 30, 2015 Kathy Crump Introduction There are many factors that contribute to the current state of the United States economy. An analysis of the current performance of certain factors can help to determine the financial decisions and the fiscal policies the government will need to recommend for the future. We will discuss in detail four important factors; unemployment, expectations, consumer income, and interest rates, their existing effect on aggregate demand and supply as they relate to the Keynesian and Classical model. Unemployment According to the Bureau of Labor Statistics (BLS), the current and official unemployment rate is the lowest is has been since 2008. As of December of 2014, the official unemployment rate is at 5.6 percent ("Bureau of Labor Statistics", 2015). Before this, the lowest it has been was in 2008 when the percentage was at 5 to 5.4. Though this recent recession has put a strain on the U.S. economy, there seems to be a slow improvement on the unemployment rate. Time will tell if the upcoming fiscal policies will see this trend continue or cause an increase in the unemployment rates. Expectations Expectations of consumers and businesses determine the future of the economy. In June of 2014, the American people’s outlook on the U.S. economy experienced a one-year high of 48.5, according to the...
Words: 1681 - Pages: 7
... Introduction This paper will analyze a case analysis focused on Starbucks’ supply chain. Starbucks’ business model and supply chain strategy will be reviewed. Also, the global supply chain challenges the company faces will be analyzed. Further, the importance of aggregate planning and demand forecasting to Starbucks’ supply chain will be discussed. Finally, ways in which Starbucks utilizes pricing promotions to influence demand will be highlighted. Starbucks’ Business Model & Supply Chain Strategy Starbucks is a global coffee chain with over 21,000 outlets in 60 countries. The company is built on its brand which demands an experience and service above all other coffee chains. Until recently, Starbucks retained full ownership and control of its outlets. Franchising is relatively new transition for the organization. Yet, Starbucks takes a different approach to franchising than other large organizations like Dominos or Subway. Starbucks is extremely selective about who they franchise to. They take steps to ensure everyone they partner with will operate in sync with Starbucks’ culture and brand emphasis, as well as align with their environmental sustainability commitment. (Curtis, 2015) The fact that Starbucks was able to grow into a global organization with over 21,000 outlets speaks to the strength of their supply chain. Their supply chain strategy is built on a make to stock model which focuses on utilizing real time demand to efficiently meet the...
Words: 1125 - Pages: 5
... | |Objective and Outcome Mapping | |Lesson Plan | |Assessment Scheme and Schedule | |Model Question Paper (Semester End Examination (SEE)) | |Lectures Slides, Tutorials and other Learning Resource provided (See Annexure 1) | |Assignments / Course Projects | |Evaluated samples of Assignments / Course Projects (One sample each from Excellent, Average and Satisfactory Bands) (See | |Annexure 2: Hard Copy of Evaluated Project Reports) | |Quizzes and CAT-I & II question papers and...
Words: 7055 - Pages: 29
...University of Phoenix Material Aggregate Demand and Supply Models Select and complete one of the following assignments: Option 1: Economic Advisement Paper Imagine that your Learning Team is a group of economic advisors working for the U.S. president. You have been tasked with evaluating the current state of the U.S. economy and making recommendations on how to improve it. Part 1 Analysis and Recommendations: Describe the current state of the following economic factors and analyze how each affects aggregate supply and demand: • Unemployment • Expectations • Consumer income • Interest rates Develop a set of recommendations for the president regarding government spending and taxes based on the economic factors' current state. Part 2 Evaluation of Recommendations: Before you submit your recommendations to the president, decide as a team to evaluate the recommendations from different perspectives. Assign half of your team to evaluate the recommendations from a Keynesian perspective and the other half from the Classical perspective. Based on these evaluations, what adjustments will you make to your recommendations, if any? Write a 1,050- to 1,400-word report that summarizes the recommendations. Option 2: Economic Critique Imagine that your Learning Team is a group of international reporters. You have been tasked with describing and critiquing the current state of the U.S. economy. Describe the current state of the following...
Words: 281 - Pages: 2
