ECON 144 Lecture Notes - Lecture 5: Kenneth Rogoff, Thomas Herndon, Monetary Policy
Document Summary
What we didn"t cover in the last unit: How much debt is too much: carmen reinhardt & kenneth rogoff. (cid:1688)when a country"s debt-to-gdp ration passes 90%, economic growth slows down(cid:1689) Austerity & sequester: cut back government spending: thomas herndon (reproduced the other two people results): he could not reproduce them. Reinhardt & rogoff made two mistakes: accidentally left out 5 of 20 countries, took a simple average instead of an actually average. Wealth is not money until it is converted into liquidity (state where it can be used to purchase things) Functions of money: a medium of exchange: eliminates the need of an exchange, a store of value: ability to consume today or tomorrow, a unit of account: somethings value compared to something else"s value. Commodity money = money that has the value outside of being used for money. Fiat money = money that has no value outside of being used for money (our money)
