ANNOTATION

Takeaway

methodology

main point

Violence as a form of nation building, a legacy of colonialism

The genocide is a legacy of colonialism which constructed racialized politics in the region

youth gangsters justified their crimes in the name of women, substance abuse

violence to curb violence

link between female materialism and gang behavior

initiation as a Xhosa (entering manhood) is associated with starting gang activity

justification of gangsterism=keeping my woman happy

women and their materialism is named by a community leader as the culprit/cause of violence

racialization of gangs: only coloured people, people who live in a certain area, can be in a gang... the rest are just "naughty boys"

key idea: men are driven to gangsterism by the stereotype that men should support their women

masculinities in action

legacies of imperialism still prevail

Would what black people teach their children about police be an example of this?

definition of everyday peace

Despite being a Peace and Conflict Studies minor, I feel that all of the classes I have taken have focused on violence rather than peace. Could this be because the male dominant lense is more violent/views violence as more important than peace?

my perception was that sex tourists/foreigners tend to be more abusive towards the women they engage with...

how do we fight this... ethnography seems a valuable tool...

Storytelling provides a medium to account for these externalities

A continuation of the "white mans burdern" savior complex

intersectionality

expansion of the meaning of violence in my eyes

common theme...failure to acknowledge gender

Trade openness and investment have boosted China's economy

If a country has a trade surplus exports are greater than imports. As a result, the US will have more foreign currency and want to invest in foreign financial assets --> outflow of funds. Because more in the US are using their private savings to invest abroad there is less money invested in firms domestically (this may be partially offset by foreign firms investing in the US but on net US invests more abroad than foreigners invest in US). If the US has a budget deficit and is private savings will have to be used to fund the deficit. Investment for US will be crowded out even more because private savings are spent more abroad and to finance debt.

Crowding out occurs when the government spends more than it has (i.e. G>T) and public savings will not cover expenditures. As a result, the government has to borrow and will issue bonds --> people will use private savings to purchase govt bonds --> investment for firms is "crowded out" by the need to fund the budget deficit.

Each periods budget constraint is linked to the next period's budget constraint because current debt is financed by future surpluses (i.e. at some point the change in Bt+1 must be positive).

The primary deficit is the government expenditures+transfers-taxes. The total deficit is government expenditures+transfers-taxes+interest on accumulated debt.

Debt has increased because expenditures have increased while taxes (mainly corporate taxes but also partially because of income taxes) have decreased. Since government revenues (taxes) were less than expenditures the government had to borrow to cover expenditures (i.e. debt increased).

Although it is not the highest, US debt-to-GDP is relatively high compared to other OECD countries.

Government consumption: expenditures intended to provide goods and services to the public (e.g. education). Government gross investment: expenditures spent on fixed assets that directly benefit the public or help the government do their job (e.g. highways).

There is no such thing as a government budget constraint because the government can always print more money to repay its debt. Government should aim to keep SR output at zero (i.e. GDP at potential). In the SR increasing the money supply increases AD however in the LR this could cause inflation. In countries like the US printing more money has minimal damage as they can continue to borrow without consequences. Although increasing the money supply could increase inflation, MMT argues that there are policy measures to avoid this. For example, if inflation causes wages to decrease the government can intervene by setting a minimum wage. Critics of MMT argue an increase in the money supply without proper monetary policy will always result in inflation. Another issue is that not all sectors will reach potential output at the same timee.

As interest rates approached the zero lower bound fiscal policy became more important. When the 2010 Euro crisis occurred although QE still an option fiscal policy was needed to prop up the economy. Monetary policy and fiscal policy worked together in the sense that monetary policy insured borrowing was cheap by keeping interest rates low and fiscal policy by borrowing from the government.

Rational expectations: people observe that the government is running a deficit and are aware that they will have to pay more taxes in the future to repay government debt so will save now for the future (i.e. reduce consumption). Fiscal policy won't work because of this.

In the 1970s the increasing price of oil caused a shock to the AS curve (o-bar). Fiscal policy shifts the AD curve up and may increase short run output but also increases inflation. An increase in inflation also increases the nominal interest rate in the SR which makes it more expensive for the government to borrow as well.

Debt plays a role in both the outlays and sources of funds in the government budget constraint. iBt represents the interest on accumulated debt and is considered an expenditure (outlay). The change in government debt (Bt+1-Bt) is considered a source of funds because if the debt increases when the government has to borrow to cover expenditures.

Income taxes, retirement receipts and social insurance

Health and social security

The US has a strong federal government with taxation powers and the ability to redistribute wealth through federal programs while the EU does not. The US has a common banking system so if a bank in one region fails this does not derail the whole regions banking system because they are all tied to the same central bank. Europe does not. However, in the US strong growth overall does not translate to low unemployment in every state.

Benefits: Countries with in union are better able to weather regional shocks. For example in the EU if France experiences a bad shock they can still rely on the other countries in the EU to demand exports from them. Also trade and financial flows can occur more easily within the union. Costs: Monetary policy that is optimal for members of the union may be difficult or impossible to achieve. For example, PIGS was experiencing high unemployment while Germany was experiencing decreasing inflation.

Every open economy has 3 goals: stable exchange rate, monetary policy autonomy, and free financial flows. However, only two of these can be achieved at once. A monetary union like the EU allows for free financial flows and a stable exchange rate, however it does not allow for monetary policy autonomy. A floating exchange rate (like the US) allows for monetary policy autonomy and free financial flows, but does not allow for a stable exchange rate. Capital controls (i.e. the prevention of free financial flows: citizens from investing abroad, and foreigners from investing domestically) allow for a stable exchange rate and monetary policy autonomy.

If a country pegs its exchange rate to another currency's, the country must mimic the monetary policy of the country it pegs its exchange rate to exactly. For example, if an exchange rate is pegged to the USD and the Fed increases the interest rate, the country who pegged their exchange rate to the USD must also increase their interest rate otherwise their currency will depreciate (and the pegged exchange rate cannot be maintained). The reason behind this is that when the US increases their interest rate more invest in US financial assets and the USD appreciates. To prevent their currency from depreciating against the USD (and breaking the peg) the country must also increase their interest rate. This becomes problematic because different countries will likely experience different economic shocks. If a country that has pegged its exchange rate to the US experiences an economic shock whereas the US has not, the country cannot use monetary policy (i.e. changing the interest rate) to stabilize their economy. The country can only rely on fiscal policy.

Flexible exchange rate: no government intervention, exchange rate allowed to float. Managed floating: currency mostly allowed to float, government may intervene by changing the money supply. Crawling peg: exchange rate is "pegged" to another country's currency with a range on either side; government will intervene if the value of the currency falls out of range. Fixed exchange rate: exchange rate is fixed by law to another currency/basket of currencies.

Demand shock: foreign central bank increases interest rate --> demand for that foreign currency increases (because investments are more attractive to financial investors due to their higher return) --> that foreign currency appreciates --> USD depreciate --> US exports become more attractive, while imports become more expensive for US --> NX for US increase --> AD curve shift right. Supply shock: If a foreign country is heavily dependent on imports from a country (say US)/uses USD for transactions and suddenly the USD appreciates --> goods imported from the US will become relatively more expensive --> AS curve shift down (i.e. negative o-bar shock)

If the US increases its interest rate the AD curve will shift left because it will be more expensive for firms to take out loans to invest. Furthermore, more will want to invest in US financial assets --> increased demand for USD --> USD appreciate. If a currency appreciates, the USD for example, it has more purchasing power from a foreign perspective. As a result, US exports will become more expensive relative to foreign goods (and therefore decrease) and foreign goods will become cheaper relative to US goods (US imports of foreign goods will increase). Overall, net exports will decrease for US shifting the AD curve left further. The slope of the AD curve will also be flatter because a change in the interest rate affects both NX and I on the IS curve (i.e. monetary policy has a stronger effect on the economy)

A change in the interest rate affects both investment and net exports.

In the SR prices/inflation are sticky (i.e. don't respond quickly to shocks). Therefore, an increase in the nominal exchange rate also increases the real exchange rate since RER=EP/P*. So if the fed increases the federal funds rate (i.e. the nominal interest rate) they will increase the RER as well.

An increase in the federal funds rate appreciates the dollar since all interest rates move together (see above) and vice versa.

Financial investors are the most important traders of currency because they dictate the market for currency exchange. Financial investors will invest in countries with high interest rates because those countries provide the highest return on investment. For example, if the US if the fed increases their interest rate more investors will want to buy American financial assets. As a result, the demand for the USD will increase because investors will need the currency to buy financial assets in the US. When demand for a currency increases, the value of the currency appreciates.

Transportation costs in acquiring and selling foreign goods, tariffs, not all goods are tradeable

PPP is the law of one price applied to all baskets of all goods and services. PPP indicates E=P/P (i.e. the price in the US times the nominal exchange rate should equal the price in a given foreign country). We expect it to hold in the LR because we expect the law of one price to hold in the LR: RER=EP/P --> RER=(P/P)P/P --> RER=P/P --> RER=1

The nominal exchange rate (E) expresses the exchange rate in terms of currency and the real exchange rate (RER) expresses the exchange rate in terms of goods and services. E=P/P (i.e. the price level of a given foreign country over the US price level) and RER=EP/P.

We expect the law of one price to hold because of arbitrage opportunities. For example, lets say goods are cheaper in the US than in Canada. Canadian firms will observe that US goods are relatively cheaper and want to buy US goods to resell at home for a profit. As a result, demand for US currency (to buy the cheaper goods) will increase. The increased demand for the USD will in turn cause the dollar to appreciate until the arbitrage opportunities are eliminated (i.e. the price of goods in the US is the same as in Canada).

The law of one price indicates that in the LR tradeable goods must sell for the same price (holding currency constant) in all countries.

The real exchange rate in this case indicates how many baskets of goods and services we can obtain in Canada for the same resources that would give us one basket of goods and services in the US. The real exchange rate of 1.2 indicates that the same amount of resources that would purchase one basket of goods and services in the US will purchase 1.2 baskets in Canada. This indicates that goods are cheaper in Canada.

The fed has updated its monetary policy framework because of the flattening of the Phillips curve (i.e. inflation has remained low for a while despite changes in SR output) and the lower LR interest rate. Since the interest rate is currently so low (near the zero-lower bound) it is more difficult to implement monetary policy in the event of a crisis and necessitated a change. The fed has updated its monetary policy framework by spreading the average inflation target over a longer period. They are currently keeping the inflation target at the same level but have set expectations for it to increase in the future. Also allow GDP to produce above potential because inflation has stayed low despite fluctuations in GDP. The fed has indicated though that if inflation or unemployment increases they may intervene.

Decreased federal funds rate to almost zero and gave forward guidance that it would stay there for a while to encourage borrowing. QE to reduce other interest rates besides the federal funds rate. Relaxed federal reserve/capital requirements to encourage lending. Acted as lender of last resort: decreased lending rate to banks and tried to eliminate stigma, purchased commercial paper (i.e. private bonds), increased swap lines (lending to other countries central banks) to fill in for decline in private banks' lending.

The CARES Act was a fiscal stimulus package put out by Congress intended to aid those suffering from the coronavirus pandemic. Some of its measures included unemployment checks, checks to families making less than $70,000 and a paycheck protection program. It enters out SR model by stimulating consumption. Consumption=income-taxes+transfers. The CARES Act increased transfers in hopes that the recipients would use their money to consumer and shift the AD curve right.

SR GDP has decreased, unemployment has increased, inflation (look at AS/AD curves... appears inflation has decreased on slides but make judgment based on question).

Consumption, financial frictions, global supply chain, new health and safety measures. Consumption has decreased (fear, people losing their jobs) which has shifted the AD curve left. Financial frictions have increased (banks perceive more risk/uncertainty, many firms/indvs have defaulted on their loan payments --> increasing their interest rates) which shifted the AD curve left further. New safety regulations made the cost of production more expensive for firms --> firms increase prices to preserve their margins --> shift AS curve up. The disruption of global supply chains also shifted the AS curve up.

Quantitative Easing is a form of open market operations that involves the fed purchasing financial assets from banks in hopes that they will use their newly acquired reserves to provide loans to firms for investment. The ultimate goal is to lower other interest rates (i.e. the interest rate for firms to borrow).

Use fiscal policy to shift the AD curve right (i.e. increase government spending or lower taxes to increase consumption). Alternative monetary policy tools include reducing the reserve requirement (to encouraging lending) and QE.

If the federal funds rate is at the zero-lower bound the fed will not decrease the fed funds rate into negative territory. The AS curve reacts to the previous period's inflation. If the fed decreases the federal funds rate into negative territory the real interest rate will become negative as well and shift the AS curve down. In the next period the AS curve will be shifted down again continuing in a deflationary spiral worsening the recession with each cycle.

The real interest rate=nominal interest rate-inflation. However, since inflation is sticky, the fed can influence the real interest rate through the nominal interest rate (i.e. the federal funds rate). But once the federal funds rate approaches the zero-lower bound, the Fed would make the real interest rate negative by continuing to decrease the federal funds rate. Decreasing the federal funds rate once it has already approached the zero-lower bound is usually not done is it can lead to a deflationary spiral (i.e. monetary policy cannot function as normal).

The interest rate at which firms can borrow is equal to the real interest rate=federal funds rate+financial frictions (f-bar). Financial frictions are frictions in the financial markets that prevent borrowing and lending from occurring as normal (i.e. loans are given less frequently, at higher interest rates, or both). An increase in f-bar indicates that banks perceive more risk in lending --> the real interest rate increasing regardless of what the Fed does regarding the federal funds rate. As a result, the MP curve will shift up and intersect the IS curve further left than previously. The AD curve is obtained by combining the IS and MP curves. Since -f-bar=federal funds rate-real interest rate the AD curve will shift left. Similarly, the AS curve will shift down (same dynamics as previous chapters).

An interest rate spread is the difference between 2 types of interest rates (usually refers to the difference between the interest rate for firms and the federal funds rate since US government bonds are considered to have virtually zero risk). The spread between the two interest rates is often referred to as a risk premium. This is because banks will charge a higher interest rate for borrowers that indicate more risk. For example, a firm taking out a loan to invest in new capital is assumed to present more risk than the government taking out a loan.

Say a country pegs their exchange rate to the USD such that 1 USD=1 currency. If a country pegs their exchange rate to the USD, they must have enough reserves of the USD such that if someone came into a bank with the country's currency demanding USD, the bank would be able to provide exchange rate written into law of USD. This becomes an issue when the country goes into recession while the US does not. Since the country has pegged their exchange rate to the US they cannot use monetary policy to respond to the shock. But financial investors will no longer want to invest in the country's financial assets and will want to sell off existing assets. As a result the supply of that country's currency will increase and its real value will depreciate against the dollar. However, the country has still written into law that 1 USD=1 currency so banks have to maintain this. People will panic and rush to exchange their money. Eventually the central bank will run out of reserves and the government will have acknowledge the peg has broken. As a result, the currency will suddenly depreciate a lot and imports will become more expensive. Although their exports will become cheaper this won't likely be beneficial since an economy in a recession produces less.

Law of one price and arbitrage opportunities... PPP is this applied to all goods. If one country has lower prices than another PPP not hold bc goods cheaper in that country. Arbitrage opportunity --> buy cheap goods and sell where expensive --> increased demand for cheap country's currency --> cheap country's currency appreciates (i.e. nominal interest increases). In the LR one basket of goods in the US should be purchased with the same resources as any other country.

The Canadian dollar has depreciated because it has decreased in value and purchasing power in the US. Whereas previously one USD was equal to two Canadian dollars, it is now true that one USD is equivalent to 3 Canadian dollars. Meanwhile the USD has appreciated in Canada because one USD is now worth 3 dollars (so can now buy 3 Canadian dollars with one USD) whereas before it was only worth 2.

The difference between two interest rates, usually indicates how much harder it is for a private entity (compared to the government) to borrow during a certain point in time. Interest rate spread is greater during a financial crisis (i.e. economy is experiencing significant financial frictions)