m unemployment is more of a problem than inflation. Keynesians also state that macroeconomic fluctuations significantly reduce economic well-being, that recessions or depression are economic maladies, not efficient market responses to unattractive opportunities, as the monetarists suppose.
Hence Keynesians advocate activist stabilization policy to reduce the amplitude of the business cycle, which they rank among the most important of all economic problems. So, Keynesians developed the notion of a fiscal/monetary mix to control spending and the balance of payments simultaneously. Well-timed changes in taxes and government spending were to be balanced to control the economy. If this macro measures didn\'t work out as intended, the goverment should administer price and wage controls. Keynesians identified themselves as engineers who adjust the controls and, when necessary, design new controls to maintain just the right mix of policies.
In order to know how to develop policies, Keynesians worked out forecasting models with hundreds of equations. These models are processed on powerful computers simulating possible changes in economy affected by different policy actions.
Monetarists are critical of these models, and prefer stable policy rules that reduce variability and uncertainty for private decision makers. They suppose that government should maintain the long-run stability, and not interfere into economic life too often. Monetarists see such efforts as frequently destabilizing.
Слова и выражения:activist – активист; активный политик
adjust – приспосабливать, регулировать
administer – применять, вводить, внедрять
advocate – защищать, поддерживать
aggregate – совокупный
amplitude – амплитуда
curve – кривая ( линия )
equation – уравнение
fiscal – фискальный, имеющий отношение к государственной казне
fluctuation – колебание
forecast – прогноз; прогнозировать
hence – отсюда
ideal – идеальный
impact – удар, воздействие, импульс
instantly – моментально
interfere – вмешиваться, мешать
maintain – поддерживать
malady – болезнь, расстройство
opportunity – возможность, шанс
process – обрабатывать
respond – отвечать
response – ответ
shortage – нехватка, недостаток ( чего-либо )
simulate – симулировать
simultaneously – одновременно
state – утверждать
surplus – избыток
typical – типичный
unattractive – непривлекательный
variability – изменчивость, вариативность
Keynes John Maynard – Джон Кейнс, известный американский экономист
a great variety – значительное разнообразие
fine-tune – (тонко) настраивать
majority – большинство
short-run – краткосрочный
contrary to – в противоположность
more of a problem than – (является) большей проблемой, чем
well-being – благосостояние
rank among – занимать положение среди
fiscal/monetary mix – смесь монетаристских и фискальных мер
well-timed – хорошо спланированный во времени
as intended – как было задумано, как предполагалось
identify as – отождествлять ( с кем-либо )
critical of – критически настроенный (к)
long-run – долгосрочныйExercise 5
Answer the questions:
1. What theory has the Keynesians developed?
2. What is aggregate demand affected by, in Keynesians\' opinion?
3. What are the most important public decisions affecting aggregate demand?
4. How has the Keynesians\' attitude towards monetary measures changed recently?
5. What do changes in aggregate demand have the greatest short-time impact on?
6. What do Keynesians think about the typical level of unemployment?
7. What is their opinion on macroeconomic fluctuations?
8. What economic policies do Keynesians advocate?
9. Who do Keynesians identify themselves as?
10. What processes do forecasting models simulate?Forecasting and Econometric Models
An econometric model is a tool that helps economists forecast future developments in the economy. Econometricians study past relationships between variables such as consumer spending and gross national product, and then try to forecast how changes in some variables will affect the future course of others.
To make such calculations econometricians need an economic model, and a theory of how different factors in the economy interact. For convenience, economists use mathematical models, which are a set of equations that describe various relationships between variables. These models are used to predict future trends in the economy, and are called econometric models.
Actually, no econometric model is ever truly complete and absolutely reliable both as a whole and in details. Some variables cannot be predicted because they are determined by forces «outside» the model. For example, a reliable realistic model must include taxes collected by the government because taxes make the gap between the gross income earned by households and businesses and the net income (disposable income) available for spending. The taxes collected, in their turn, depend on the tax rates in the income tax laws. If econometricians wish to forecast economic activity several years into the future, they have to include the anticipated future tax rates into their model\'s information base. So, they are supposed to make assumptions about possible changes in future income tax rates, the monetary policy that will be carried out by the central bank, and many other such «outside of the model» (or exogenous) variables in order to forecast all the «inside of the model» (or endogenous) variables. Being incomplete, econometric models sometimes are far from offering reliable predictions.
Слова и выражения:
anticipate – предполагать, предвосхищать
calculations – расчеты
complete – полный, завершенный
course – курс
determine – определять
econometric – эконометрический
econometrician – эконометр
econometrics – эконометрика
endogenous – эндогенный ( внутренний, присущий системе )
exogenous – экзогенный ( внешний по отношению к системе )
forecast – прогноз; прогнозировать
gap – пробел, брешь
include – включать
incomplete – неполный
interact – взаимодействовать
predict – предсказывать
prediction – предсказание
reliable – надежный
variable – переменная
gross national product – совокупный национальный продукт
as a whole – (взятый) в целом
in details – в деталях
gross income – совокупный доход
net income – чистый доход после выплаты налогов
и иных обязательств
several years into the future – на несколько лет в будущее
information base – информационная база
Exercise 6
Answer the questions:
1. What do econometricians study?
2. What economic variables do they take into account while producing their models?
3. What is an economic model?
4. Why cannot some economic variables be predicted?
5. What economic variables are called exogenous and endogenous?How Does Forecasting Work?
1
An economic forecaster was known to have an horseshoe prominently displayed above the doorframe of his office. Asked what it was for, he replied that it was a good luck charm that helped his forecasts. But do you believe in that superstition? he was asked, and he said, «Of course not!» But then why do you keep it? «Well,» he said, «it works whether you believe in it or not.»
2
An econometrician and an astrologer are arguing about their subjects. The astrologer says, «Astrology is more scientific. My predictions come out right half the time. Yours can\'t even reach that proportion.» The econometrician replies, «That\'s because of external shocks. Stars don\'t have those.»
3
An economist is a trained professional paid to guess wrong about the economy. An econometrician is a trained professional paid to use computers to guess wrong about the economy.
4
Economic statistics are like a bikini, what they reveal is important, what they conceal is vital.
5
Forecasting is like trying to drive a car blindfolded and following directions given by a person who is looking out of the back window.
Слова и выражения:argue – спорить, аргументировать
astrologer – астролог
astrology – астрология
bikini – бикини ( тип дамского купального ансамбля )
blindfolded – с завязанными глазами
charm – очарование, чары
doorframe – дверная рама
external – внешний
guess – догадываться, строить догадки
horseshoe – лошадиная подкова
luck – успех, удача
prominently – на видном месте
proportion – пропорция
shock – удар, потрясение, шок
superstition – предрассудок
vital – жизненно необходимый
good luck charm – талисман, притягивающий удачу
come out right – «получаться», «выходить»
guess wrong – строить неверные предположения, догадкиExercise 7
Answer the questions:
1. What did the forecaster have the horseshoe displayed for?