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Macroeconomic policy for stable growth

Related Document
Frame of Image 646
6 Five-Year-EconomicDevelopment Plans
5,000 Liberation from Japanese Colonial Rule
7,355
Financial Crisis
1,000(1977) 87 100(1964)
1962 1970 1980 1990
67
1945 1953
OECD Member 1995 1998 2003P
6
Conceptual Path of GDP (or Income)
Long-term Growth vs. Short-term Fluctuations
Income per capita
GDP
Potential GDP C
B A
Actual GDP
Time
7
The Circular Flow: Basic Concept
Income ($) Labor
Households
Firms
Goods Expenditure ($)
8
The Circular Flow: Three Dimensions
Y = F(L,K) = WL + RK = C + I + X - M
Production (or Supply): Y = F(L,K)
 Firms produce goods and services (Y) by employing
labor (L) and capital (K), and using “technology” (F(.,.)).
Distribution: Y = WL + RK
 All the value added is distributed through returns for labor (W) and capital (R).
Expenditure (or Demand): Y = C + I + X - M
 Households spend income for consumption (C), and firms spend income for investment (I).
9
Growth vs. Fluctuations
Long-Term Economic Growth
 Evolution of economic potentials (or production capabilities) from a long-term perspective (more than 5 years).
(The aggregate demand-side only affects composition of the products.)
Short-Term Economic Fluctuations
 Fluctuations of business conditions (or business cycles) from a short-term, perspective (less than 3 years).
(The aggregate demand-side plays a great role.)
10
Some Confusing Arguments
“Active consumption boosts growth.”
“The more current account surplus is, the better.”
 “The more export is, or the less import is, the better.”
11
Ⅱ.


Full Text
Title Macroeconomic policy for stable growth
Similar Titles
Material Type Proceedings
Author(English)

Cho, Dongchul

Author(Korean)

조동철

Publisher

Korea:KDI

Date 2010-06
Event

Utilization of Free Economic Zone for Trade and Investment Promotion, Uzbekistan

Pages 40 (pdf)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Holding KDI국제정책대학원
Organizer KDI, KOICA
Venue 대한민국
Program Type Forum
Project Term 2010-06-07 ~ 2010-06-27