Monetary policies since the Great Recession
Business cycles are present in all economies, and the United States of America is not exception. Picks and lows are present in all economies as part of the business cycles, and can be identify in different variables, the most important one, for example, the gross domestic product. The graph 1 shows the trend on the Real Gross Domestic Product for the United States of America since the middle of 2006. Although the long term there’s a growing tendency, we can see several picks and lows during the showed period, been the period between 2007 and 2008 the most remarkable, due to the Great Recession
Graph 1: XXXX Gross XXXXXXXX XXXXXXX XX The United States XX America between 2006 XXX XXXX
|
Images Not Shown
|
XX avoid XXX fixed XXX effects of XXXXXXXXXXX, like XXX XXXXX Recession, central banks XX XXXX country XXXXXX impose policies to help alleviate the effects of XXXXXXXX cycles’ XXXXXXXXXX. After 2008, In XXXXXX XXXXXX, the XXXXXXX Reserve (XXX), that acts as central bank, made XXXXXXX in XXXXX XXXXXXXX policies XXXX XXXX’t avoid XXXXXXXXXX XX XXXXXX, but XXXX XX stabilize XXX XXXXXX XXXX of XXX XXXX GDP, XX XXX be XXXX in XXXXX 2, XXXXX it’s XXXX XXXX after 2008, none of the growing rates XXXX lower than zero.
Graph 2: XXXXXX XXXX of XXX XXXX XXXXX XXXXXXXX Product XX The XXXXXX XXXXXX of America between 2006 XXX 2016
|
Images Not Shown
|
According to Mankiw, G. in XXX books XXXXXXXXXX of XXXXXXXXX, there XX the Federal Open XXXXXX XXXXXXX (XXXX), that XXX the power XX increase or XXXXXXXX the numbers XX dollars in the economy, through XXXXX of XXXXXXXX control. These XXX XXXX tools, XXXXXX as: Open XXXXXX XXXXXXXXXX, FED XXXXXXX XX XXXXX, XXXXXXX requirements, XXXXXX XXXXXXXXX on reserves XXX XXXXXXXX the discount rate.
XXXX XXXXXX XXXXXXXXXX, are held XXXXXXX the emission or XXX of XXXXXXXX XXXX bills and XXXXX. XXX FED XXX XXXX lead XX XXXXX in order to emit XXXXXXX XXXXXXXX mass, and can also ask XXX XXXXX XX XXXX a XXXXXXX reserve in order to recover XXXX XX that monetary mass (reserve requirements). XXX FED can XXXX raise or XXXXX XXX XXXX paid on XXXXXX reserves so XXX bank XXXXXX XXXX or less money on their XXXXXXXX. XXX XXXXXX, XXX FED XXX XXXXXX the XXXXXXXX rate, so XXX XXXXXXXXXX destinates more or less money XX XXXXXXX or consumption.
All of these tools XXX implemented in order XX have a XXXXXXX amount of monetary XXXX in the economy to XXXXXXX or XXXXXX XXXXXXXXXXX, savings and investment. These can be XXXXXX XXXXXXX through the money market XXX XXXX XXXXXXXXXXX XXXXXXXX. In XXXXX 3, the money market diagram shows that the money supply is XXXXXX fixed so, when XXX FED chooses XX raise XXX interest rate, less XXXXX XXXXX XX demanded XX XXXXXX XXXXXX to deposit or XXXXXX their money as XXXX will be XXXXXXX enough XXXXX XXX the future XXXX XXXXXXXX a XXXXXXXX in XXXXXXXXXXX. In the opposite case, XXXX XXX XXXXXXXX rate is low, people would prefer to expend their money, XX XXXX don’t XXXX money XXX the XXXXXX, XXXXX XXXXXX XXXXXXXXXXX.
Graph 3: The money XXXXXX diagram
|
Images Not Shown
|
XXXXXXXXX XX XXX XXXXXXX XXXXXXX Bank of Saint XXXXX website, the XXXXXXXX on XXXXXXXX is the XXXXXX XXX most XXXXXXXXXX used tool XXXXX XXX Great Depression. XXXXX the end of 2008 XXXX have been focusing on controlling XXXXXXXXXXXX XXX contractionary policy in order XX XXXXXXXX stability of the XXXXXXX. It can XX XXXXX in XXX graph X that XXXXXX XXXX the XXX XXXXXXX XXXXXXXXX XXX interest rate, XXX that comparing it XXXXXX XX an XXXXXX XXXXXX, XX XXXXX XXXXXXXX rate. XXXXX 2009 the XXX has XXXXXXXX a low interest XXXX, as a XXXXXXXXXXXX XXXXXX, XXXX XXX aiming XX XXXXXXX XXX XXXXXXXXXXX XXX expand
the XXXXXXX XXXX were strongly contracted after the XXXXX XXXXXXXXXX.
Graph X: Interest rates XX XXX FED between XXXX and XXXX
|
Images Not Shown
|
XXXX the XXXXX Depresion hitted, there were XXXX devastating consecuences XX XXX XX and World XXXXXXX. The most XXXXXXXXX XXX XXX XXX XXXXXX XXXX of unemployment. After XXX XXXXX Depression, and XXX to the XXXXXXXXX in XXXXXXXXXXX many employees had XX laid staff, XXX to XXXXXXXXXXXXX XX XXXXXXX. This XXX to XXXXXXX XXXXXXXXX XX consumption, making it a snowball in XXX XXXX XXXX. That’s the reason why XXXXXXXXXXX the interest rate XXX XXX XXXXXXXX XX the recovery of XXX economy. It can XX shown in XXX graph 5, a table from XXX Bureau of XXXXX XXXXXXXXXX, XXXX the period XX 2010 XXX 2013 XXXX XXX years XXXX XXXX unemployment, XX XXXXXXXXXXX of the XXXX term damages caused by XXX depression. Nevertheless, XXX that a decade has passed XXXXX XXX XXXXX XXXXXXXXXX the XXXXXXXXXXXX XXXX XXX XXXXXXX XX XXX lowerest since XXX XXXXXXXXX XX it, XXXXXX that in XXX XXXX XXX, the XXXXXXXX policy XXX have an effect XX the XXXXXXXX XX employment XXX XXXX XX XXX XXXXXXX.
Graph 5: XXXXX of XXXXXXXXXXXX rates XXXX the XXXXX XXXXXX between XXXX and XXXX
|
Images Not Shown
|
XX conclusion the effects of XXXXXXXX policy in the XXXXXXX XXXXXX, through employment, and its XXXXXXX XX consumption, XXXXXXXXXX XXX savings in XXX United XXXXXX, XXX be proven after the XXXXX Recessions of XXXX.
">