Okun's Law is used most often when analyzing the economic situation. The scientist introduced this coefficient to characterize the ratio of the unemployment rate and the growth rate.
In 1962, Oaken deduced a pattern based on empirical data. Statistics have shown that a 1% rise in unemployment can lead to a fall in actual gross domestic product in line with potential GDP by 2%. This ratio is not constant and differs depending on the country and time period.
Thus, Okun's law represents the ratio of quarterly changes in the unemployment rate to real GDP.
Okun's Law Formula
The Okun's Law formula looks like this:
(Y ’- Y) / Y’ = c * (u - u ’)
Here Y is the real volume of GDP,
Y '- potential GDP,
u is the real unemployment rate,
u 'is the natural rate of unemployment,
c - Okun's coefficient.
Okun's coefficient since 1955 in the United States has usually been equated to 2 or 3.
This Okun law formula is used in rare cases, since the level of potential GDP and the unemployment rate are difficult indicators to estimate.
There is a second version of the Okun's law formula:
∆Y / Y = k - c * ∆u
Here Y is the actual production volume,
∆Y is the change in the actual level of production in comparison with the previous year,
∆u is the change in the actual unemployment rate in comparison with the previous year,
c - Okun's coefficient,
k is the average annual growth of production under the condition of full employment.
Criticism of Okun's Law
So far, the Okun's Law formula has not been recognized and has been criticized by many economists who question its usefulness in explaining market conditions.
Okun's law formula emerged as a result of processing statistical data, which are empirical observations. The law was not based on a solid theoretical basis, tested in practice, since Okun expressed the pattern only in the study of US statistics.
Statistics are approximate, and gross domestic product can be influenced by a large number of factors, not just one unemployment rate.
Nevertheless, this simplified consideration of the relationship of macroeconomic indicators can often be useful, as shown by Okun's research.
Features of Okun's Law
The scientist derived a coefficient that reflects the inverse relationship between the volume of production and the level of unemployment. Oaken believed that GDP growth 2% associated with the following shifts:
It can be noted that by reducing Okun's cyclical unemployment rate by 0.1%, the expected rate of increase in real GDP will be 0.2%. But for different states and time periods, this value will vary, since the dependence was practically tested for GDP and GNP.
Examples of problem solving
Unemployment rate - 10%,
Actual gross domestic product (GDP) - 7,500 billion rubles.
Difference between actual and natural unemployment rate:
That is, GDP lags behind the potential value by 8%. If we take the actual gross product for 100%, we get the following result:
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Okun's law
Problem number 38. Determining government policies to stabilize the economy
In the country's economy, the natural unemployment rate is 7%, and the actual rate is 9%. Potential GDP is $ 3,000 billion, Okun's coefficient is 2.5. What policy should the government pursue to stabilize the economy (consider all possible instruments) if it is known that the marginal propensity to consume is 0.9.
Problem number 51. Calculating potential GDP
The unemployment rate this year was 7.5%,
and actual GDP - $ 1,665 billion.
The natural unemployment rate is 5%.
Determine the potential GDP value if Okun's coefficient is 3.
Problem number 52. Calculating actual GDP
The unemployment rate this year was 6.5%.
Natural unemployment rate - 5%,
and Okun's coefficient is 2.
Potential GDP is $ 2,550 billion.
Determine the GDP lag (in%) and the GDP losses caused by cyclical unemployment (in billions of dollars).
Problem number 53. Calculation of Okun's coefficient and natural unemployment rate
The potential GDP was $ 100 billion, the actual GDP was $ 97 billion, and the actual unemployment rate was 7%.
When actual GDP fell by $ 6 billion, the unemployment rate rose to 9%.
Determine the value of Okun's coefficient and the natural rate of unemployment.
Problem number 54. Calculation of potential GDP, actual and natural unemployment rate
The country's economy is characterized by the following indicators:
total population of 400 million people,
working-age population - 280 million,
the number of employees - 176 million,
the number of frictional unemployed - 6 million,
the number of structural unemployed - 8 million,
the number of cyclical unemployed is 10 million people.
Actual GDP is $ 2,040 billion and Okun's coefficient is 3.
Determine the size of the potential GDP, the actual unemployment rate, the natural unemployment rate.
Problem number 55. Calculation of actual GDP and actual unemployment rate
total population - 200 million people,
working-age population - 160 million people,
number of employees - 112 million people,
natural unemployment rate - 6.4%,
the number of cyclical unemployed - 5 million people.
The potential GDP is $ 2,500 billion, and the Okun's coefficient is 2.4.
Determine the value of the actual GDP, the actual unemployment rate, the number of frictional and structural unemployed.
Problem number 61. Calculation of losses from unemployment
The potential volume of output at a natural unemployment rate of 6% is 6,000 billion den. units. When cyclical unemployment of 1% appears, the actual volume of output deviates from the potential by 120 billion den. units. Determine the losses from unemployment if the actual unemployment rate is 8.5%
Solution
Okun's Law solutions
The population of the country is 100 million people. The share of the labor force in the population is 55%. The productivity of one employee is 12 thousand UAH per year. Actual. The country's GDP is UAH 600 billion. The natural rate of unemployment is 5%. Determine the unemployment rate of the population.
M pc = 100 million people
2. The number of employed is determined by the formula:
where. GDPf - actual. GDP; h - productivity of one employed
3. Number of unemployed :
Bw = 55 million people - 50 million people = 5 million people
4. The unemployment rate is calculated by the formula:
The natural rate of unemployment is 5%, and its actual level is 7%. Define. GDP-gap, provided that the coefficient of sensitivity to the dynamics of cyclical unemployment is 2.5, and the actual one. GDP is 900 million December.
1. Find the percent deviation of the actual. GDP from natural result of cyclical unemployment according to the formula:
2. Now let's calculate the natural. GDP:
GDP * 0.05 =. GDP * - 900
GDP * = 947 360 000 UAH
So,. GDP-growth is now: 947.36
900 = 47.36 million UAH
Determine the unemployment rate in national economy at following conditions:
1) the population of the country is 100 million people;
2) the population under the age of 16 - 20 million people;
3) are in special institutions - 4 million people;
4) natural. GDP - UAH 940 billion b) natural rate of unemployment - 6%;
6) actual. GDP is 85% natural. GDP;
7) persons who left the workforce - 26 million. Decision:
1. Determine the size of the workforce:
2. Number of employed according to the natural rate of unemployment: 50 million people
3. Then the productivity of one employee:
4. Actual volume. GDP:
0.85 940 billion UAH = 799 billion UAH
5. Number of employed:
6. Number of unemployed:
Bw = 50 million people - 39,950,000 people = 10,050,000 people
7. The unemployment rate is determined by the formula:
In 2000, the country's economy was developing in conditions of full employment (natural unemployment rate of 6%). Actual. GDP was equal to potential and amounted to UAH 300 billion. In 2005, the actual. GDP amounted to UAH 371 1 billion, potential - UAH 412 billion in December.
In 2005, determine the level of actual unemployment (with
1. Using the law. Oken, we calculate the level of actual unemployment using the formula:
2 will make the proportion:
3. Determine the unemployment rate:
The natural unemployment rate in the country is 6%, the actual - 15%. Coefficient p = 2.5
Determine the relative lag of the actual. GDP from potential; losses. GDP caused by cyclical unemployment, if actual. GDP is UAH 150 billion
1. The volume of the relative lag of the actual. GDP from potential is determined by the formula. Oaken
2. The amount of potential. GDP is
GDP * = 193,550,000,000 UAH
3. The losses caused by cyclical unemployment are nothing but. The GDP gap is calculated as follows:
GDP gap = UAH 193.55 billion -
- UAH 150 billion = UAH 43.55 billion
Self-help assignments
In the reporting year, the labor resources of the region amounted to 1,810 thousand people, including those of working age - 1,720 thousand people; working older persons and adolescents - 120 thousand people, of which: employed in the national economy (without personal peasant farms) - 1571 thousand people, students - 129 thousand people, unemployed citizens of working age - 189 thousand people, including the forcedly unemployed (looking for this slave) - 73 thousand. Axis. OSIB.
Determine the level of employment of the working-age population in national economy region for the reporting year, the level of employment of students, the level of unemployed able-bodied citizens of working age, including those looking for a robot.
The unemployment rate in the region in the reporting year was 12%. It is necessary to reduce this figure to 5%. Using the law. Okena, calculate the rate of change required for this. Gdp
If the unemployment rate is 7.8%, then at what rate should it grow. GDP to bring the unemployment rate down to 6.5%: a) in one year b) in two years?
Analyze the number of employed by all types economic activity and separately in trade in the western regions and in Ukraine as a whole for 2003-2007 pp (tab. 1)
Using the spreadsheets of the MS Excel package, build a calculation and analytical table in which to determine the specific gravity (in percent) of the split indicator. Build a line diagram illustrating the dynamics of changes in workers by type of economic activity.
Using the spreadsheets of the MS Excel package, based on the indicators in Table 2, analyze the dynamics of the number of employed citizens in the western regions of Ukraine in 2003-2007 pp, as well as calculate the proportion of women in the total number of employed to make a deduction.
Make a forecast for the next five years, using to build a model for. Your choice, statistical functions linest, trend, forecast, logest, growth. Conclusions are presented in the form of a linear diagram of the equation and trend.
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Solution. Examples of problem solving;
Examples of problem solving
Formulas for solving problems
1. Formula of Okun's law
Y is the actual volume of production;
Y * - potential volume of GNP;
u * is the natural level of unemployment;
c - empirical coefficient of GNP sensitivity to the dynamics of cyclical unemployment;
2. The general level of labor resources is determined by the formula:
R is the actual availability of labor resources;
L is the working population;
3. The general level of the unemployed is determined by the formula:
U is the actual level of unemployment;
F - officially registered
R is the total number of people willing to work.
1. Actual GDP is 3712 billion dollars, potential GDP - 4125. Determine the level of actual unemployment, if the actual level is 6% (with в = 2.5).
To determine the actual unemployment rate, we apply the Okun's law formula:
After algebraic transformations:
Thus, the actual unemployment rate was 10%
2. Calculate cyclical unemployment under the following conditions: labor force - 4 million people, employed - 3.5 million people, natural unemployment - 6%. What will be the difference between actual and potential GDP under these conditions?
Macroeconomic tasks
Example 1. Suppose that in this year the natural rate of unemployment was 5% and the actual rate was 9%. Using Okun's law, determine the value of the lag in the volume of GNP as a percentage. If the nominal GNP in the same year was equal to 50 billion rubles, how much production was lost due to unemployment.
Task number 303 (calculating the inflation rate and price index)
If the price index was 110 last year and 121 this year, what will be the inflation rate this year? What does the "rule of magnitude 70" mean?
Problem number 18 (calculating the unemployment rate)
The table shows data on labor resources and employment in the first and fifth years of the period under review (in thousand people): First year Fifth year.
Problem number 14 (calculation of macroeconomic indicators)
Problem number 415 (Okun's law problem)
Example 1. Suppose that in a given year, the natural unemployment rate was 5%, and the actual rate was 9%. Using Okun's Law.
Problem number 15 (calculation of GNP, NNP, consumption and investment)
National production includes two goods: X (consumer goods) and Y (means of production). This year, 500 units of X were produced.
Okun's Law - economic law, according to which an increase in the share of the unemployed in the total labor force above the natural level of unemployment by 1% leads to a decrease in the volume of production of the gross national product by 2.5%. The excess of the actual level of unemployment over the natural level is 4% (9% -5%), therefore, the lag in the volume of production of the gross national product is:
If the size of GNP in the same year was equal to 50 billion rubles, then the volume of production that was lost due to unemployment was:
50 * 10/100 = 5 billion rubles.
Example 2. Calculate, in accordance with Okun's Law, the loss of actual GDP due to cyclical unemployment under the following conditions:
- actual unemployment - 8%;
- natural unemployment - 5%;
- nominal GDP - 900 billion CU;
- price index - 120%.
The excess of the actual unemployment rate over the natural level is 3% (8% -5%), therefore, the loss of GDP is:
Actual (real) GDP, i.e. nominal GDP adjusted for the price index is:
GDPf = 900 / (120/100) = 750 billion.
So, if the actual size of GDP was equal to 750 billion units, then the GDP losses (i.e. the volume of production that was lost due to unemployment) amounted to:
750 * 7.5 / 100 = 56.25 billion.
Example 3. The economy is described by the following data: the natural unemployment rate is 6%, the actual unemployment rate is 7.33%, potential GDP increases by 3% per year. How quickly should the actual volume of production increase in order to ensure full employment of resources next year with a natural level of unemployment? The coefficient of sensitivity of GDP to the dynamics of cyclical unemployment is equal to 3.
For every percentage of the excess of the actual unemployment rate over the natural level, the loss of GDP is 3% (this relationship is known as Okun's law). According to the condition of the problem, this excess is 1.33% (7.33-6). Therefore, the GDP losses are equal:
GDP = 1.33 * 3 = 4% of potential GDP.
Consequently, all other things being equal, for full employment to be achieved, it is necessary that actual GDP be increased by an amount equivalent to 4% of potential GDP.
In the next year, the potential GDP will increase by 3%, by the same 3%, in order to ensure full employment, it should be increased in the actual GDP.
In this case, the total growth of actual GDP should be equivalent to a value equal to 7% (4 + 3) of potential GDP.
Okun's law is applied in macroeconomics, it explains the relationship between the level of unemployment and lagging behind the potential. The law is more theoretical in nature, explaining the general trend of the studied indicators.
The wording of Okun's law
Okun's Law is described by the following formula:
Y ∗ Y - Y ∗ ⋅ 1 0 0 % = - k (u - u ∗ )
where Y Y Y- the actual size of GDP, unit units;
Y ∗ Y ^ * Y ∗ - potential size of GDP, unit units;
- k -k - k- coefficient that determines the relationship between the excess of the real level of unemployment over natural and the lag of real GDP from potential (Okun's coefficient);
U u u- unemployment rate, %;
U ∗ u ^ * u ∗ - natural rate of unemployment,%.
Examples of problem solving
Example 1In a certain country, unemployment was 7.5%, and its natural level was 4%, while the Okun coefficient, obtained empirically by economists of this country, is 2.5. It is necessary to determine what percentage of real GDP lags behind potential.
Solution
We use the formula above. In this case, the left side of this formula will represent the lag that needs to be found:
Y - Y ∗ Y ∗ ⋅ 100% = - 2, 5 (7, 5 - 4) = 8, 75% \ frac (YY ^ *) (Y ^ *) \ cdot 100 \% = -2.5 \ left (7.5-4 \ right) = 8.75 \%Y ∗ Y - Y ∗ ⋅ 1 0 0 % = − 2 , 5 (7 , 5 − 4 ) = 8 , 7 5 %
Answer: 8 , 75 % 8,75\% 8 , 7 5 % .
Example 2In a hypothetical country, the GDP is CU 8,000 million, while the potential is CU 10,000 million. During the same period, unemployment reached 6%, and its natural level of 4%. Determine Okun's coefficient.
Solution
From the formula
Y - Y ∗ Y ∗ ⋅ 100% = - k (u - u ∗) \ frac (Y-Y ^ *) (Y ^ *) \ cdot100 \% = -k \ left (u-u ^ * \ right)Y ∗ Y - Y ∗ ⋅ 1 0 0 % = - k (u - u ∗ ) $
We get
K = Y ∗ - Y Y ∗ (u - u ∗) ⋅ 100% k = \ frac (Y ^ * - Y) (Y ^ * \ left (u-u ^ * \ right)) \ cdot100 \%k =Y ∗ ( u - u ∗ ) Y ∗ - Y ⋅ 1 0 0 %
We carry out the calculation
K = 10000 - 8000 10000 ∗ (6 - 4) ⋅ 100% = 10 k = \ frac (10000-8000) (10000 * (6-4)) \ cdot100 \% = 10k =1 0 0 0 0 ∗ (6 − 4 ) 1 0 0 0 0 − 8 0 0 0 ⋅ 1 0 0 % = 1 0
When applying Okun's law, one should take into account the fact that the proportionality coefficient used in the calculations is of an empirical nature, its application is limited to a specific country, the period of study.
To analyze the economic situation, Okun's law is often used. The coefficient, which was derived by the scientist, characterizes the relationship between the unemployment rate and It was discovered on the basis of empirical data in 1962 by the scientist, after whom he was named. Statistics show that an increase in unemployment by 1% leads to a decrease in actual GDP from potential by 2%. However, this ratio is not constant. It may differ depending on the state and time period. The relationship between quarterly changes in the unemployment rate and real GDP - this is the Formula, it should be noted, is still criticized. Its usefulness in explaining market conditions has also been questioned.
Okun's law
The coefficient and the law behind it appeared as a result of processing statistical data, that is, empirical observations. It was not based on the original theory, which was then tested in practice. Arthur Melvin Oaken saw a pattern by studying statistics for the United States. It is approximate. This is because the gross domestic product is influenced by many factors, not just the unemployment rate. However, such a simplified consideration of the relationship between macroeconomic indicators sometimes useful as well, as Okun's research shows. The coefficient derived by the scientist reflects the inverse relationship between the volume of production and the level of unemployment. Oaken believed that the 2% increase in gross product was associated with the following shifts:
- drop in level by 1%;
- employment growth by 0.5%;
- an increase in the number of working hours for each worker by 0.5%;
- productivity growth by 1%.
Thus, having reduced Okun's cyclical unemployment rate by 0.1%, an increase of 0.2% can be expected. However, this ratio varies for different countries and time periods. The relationship was tested in practice for both GDP and GNP. According to Martin Prachovnya's estimates, a 3% decrease in production volumes is associated with a 1% decrease in unemployment. However, he believes that this is only an indirect dependence. According to Prachovnya, production volumes are more influenced not by unemployment, but by other factors, for example, capacity utilization and the number of hours worked. Therefore, it is necessary to drop them. Prachovny calculated that a 1% decrease in unemployment leads to only 0.7% growth in GDP. Moreover, the dependence is becoming weaker over time. In 2005, Andrew Abel and Ben Bernarke analyzed recent statistics. They estimate that a 1% increase in unemployment leads to a 2% drop in production.
Causes
But why does the GDP growth rate exceed the percentage change in the unemployment rate? There are several explanations for this:
- Action Than more people busy, the greater the demand for goods. Therefore, the volume of production can grow at a faster rate than the level of employment.
- Imperfect statistics. The unemployed may simply stop looking for work. If this happens, they disappear from the "radar" of the statistical agencies.
- Again, those who are actually employed may start working less. This is practically not displayed in statistics. However, this situation significantly affects production volumes. Therefore, with the same number of employees, we can actually get different indicators of the gross product.
- The decrease can be associated not only with the deterioration of the organization, but also with the excessive number of employees.
Okun's law: formula
We introduce the following legend:
- Y is the real volume of production.
- Y '- potential gross domestic product.
- u is real unemployment.
- u ’is the natural level of the previous indicator.
- c - Okun's coefficient.
Taking into account the above conventions, the following formula can be derived: (Y '- Y) / Y' = c * (u - u ').
In the United States, since 1955, the latter indicator has usually been 2 or 3, as shown by the above empirical studies. However, this version of Okun's Law is rarely used because potential levels of unemployment and gross domestic product are difficult to estimate. There is another version of the formula.
How to calculate GDP growth
To calculate the GDP growth rate, we introduce the following conventions:
- Y is the actual volume of the issue.
- ∆u is the change in the actual unemployment rate compared to the previous year.
- C is Okun's coefficient.
- ∆Y - change in actual output compared to last year.
- K is the average annual production growth at full employment.
Using these designations, the following formula can be derived: ∆Y / Y = k - c * ∆u.
For the modern period in US history, the C coefficient is 2, and the K coefficient is 3%. Thus, the equation is derived: ∆Y / Y = 0.03 - 2∆u.
Usage
On practice
Suppose the unemployment rate is 10% and the actual gross domestic product is 7,500 billion currency units.
American economist Arthur Oaken (1928-1980) formulated law, according to which there is an inverse relationship between the unemployment rate and the real volume of GNP, showing that a reduction in unemployment by one percentage point gives an additional increase in real GNP by about 2%. Accordingly, an excess of the actual level of unemployment by 1% of its natural level leads to a lag in the volume of the actual GNP in comparison with the potential GNP by 2%. This is Okun's Law, and the number 2.0 is Okun's coefficient.
So, if the natural unemployment rate in a given year is 4%, and its actual level is 7%, then the difference will be 3%. This 3% must be multiplied by Okun's coefficient (3% x 2.0 = 6%). If the actual GNP is 300 billion rubles, then the society did not receive 6% of the 300 billion rubles in this year, i.e. 18 billion rubles, and the potential GNP in this country this year would amount to 318 billion rubles.
Oaken linked fluctuations in unemployment rates with fluctuations in GNP, but modern UN statistics and the system of national accounts give preference to GDP.
Okun's Law ultimately reveals the lag of actual GDP (GNP) from potential GDP (GNP) based on falling unemployment, i.e. expresses the attitude:
In the 70s of the twentieth century. for the USA and a number of other countries, Okun's coefficient was calculated empirically and amounted to about 2%.
Okun's Law assumes: every 2%, by which the real volume of production is reduced below the natural level, increases the unemployment rate by 1% compared to the natural level of unemployment, and, conversely, an increase in real output by 2%, all other things being equal, reduces unemployment by 1% ...
Money and the monetary system
The essence of money. Defining money as economic category... Disclosure of commodity exchange relations and the role of money in them. Functions of money: measure of value, medium of circulation, means of accumulation, means of payment, world money. Types of money depending on development money circulation... Real money, the gold standard, and the demonetization of gold. The main types of defective money are paper, billon coins, exchange rate coins, credit money. Forms credit money(bill, banknote, check, electronic money, credit cards), directions of their development. Monetary system, its elements, types. Monetary system Russian Federation and her legal basis... Money supply and monetary aggregates. Features of their definition in Russia.
Money- a means of expressing the value of all goods; a special product that serves as a universal equivalent.
The essence of money is manifested through its functions.
Functions of money:
1) The measure of value... Its essence is that money expresses the value of all other goods. However, this does not mean that they make goods comparable.
2) Means of circulation... When selling a product, money serves as a medium of circulation. In contrast to direct exchange of goods (T-T), the exchange of goods carried out with the help of money is called commodity circulation. Commodity formula circulation T-D-T consists of two acts: a product is directly exchanged for another product, i.e. the alienation of one's own goods was at the same time the acquisition of someone else's goods. However, the sale of a product may not be followed by a purchase. If, after selling his goods, the owner refrains from buying, then the other owner will have his goods unrealized, and he, in turn, cannot buy the goods from the third, etc. This can negatively affect the production process of goods. Money fulfills its function as a medium of exchange in a fleeting manner, i.e. at the time of payment by the buyer for the goods received.
3) Treasure education or store of value... Money fulfills the function of a means of forming treasures or a means of accumulation. This is in the event that commodity circulation due to various circumstances is interrupted at the first stage (T-D), i.e. if the sale of a product is not followed by a purchase, the money goes to treasures. This happens when the volume of production and circulation of goods decreases, prices rise and an excess amount of money appears on the market. The treasures are not only money, but also luxury goods. People prefer to keep their wealth in the form of money, since money has absolute liquidity. A rational economic subject will not use meat, bread, books, etc. as a means of accumulation, because these goods do not have absolute liquidity and cannot easily turn into a means of circulation. Incidentally, note that depreciating paper money is an unattractive store of value.
4) Instrument of payment... Money acts as a means of payment when goods are sold on credit, i.e. on credit. The unequal duration of the period of production and circulation of goods, the seasonal nature of the production and sale of goods necessitate their alienation with a deferred payment. At the time of debt repayment, money acts as a means of payment. Money performs its function as a means of payment not only when paying for goods purchased on credit, but also when paying land rent, taxes, apartment and wages. Unlike money as a medium of circulation, where direct links between the seller and the buyer are short-term and transient, in the function of payment they are quite strong and constant for the entire period of the loan provided. With the fulfillment of the function of a means of payment by money, the appearance of credit money - bills of exchange, banknotes, checks, is associated.
5) World money- in the international arena. For a long time this role was played by gold. Currently, the currency of the largest powers in the world (dollar, pound sterling, euro) is widely used, which is beneficial for these powers, since the emission turns into a stable source of income for the state. As a result, reserve currencies - official reserves foreign currency, intended for foreign economic and domestic operations. Reserve currencies can belong to the state, banks, international monetary organizations, enterprises, the population, etc.
The role of money in a market economy.
Money plays a key role in market economy.
This is manifested in the following:
1. The social role of money, their function in economic system is that they act as a link between producers... Being concretized in a certain subject, they are, as it were, a universal condition of social production, an "instrument" of social economic relations of independent commodity producers, an instrument of spontaneous accounting. social labor in the commodity economy.
2. Money also plays a qualitatively new role: it become capital, or self-increasing value... Money turns into money capital in the reproduction of individual capital due to the fact that their functioning is included in the circulation of industrial capital and they represent the starting point and result of the circulation of the latter. Money also serves the production and sale of social capital, acting in the form cash flows, which move both within the first division (production of means of production) and within the second (production of consumer goods), as well as between them.
3. With the help of money, education and redistribution occurs national income across the state budget, taxes, loans and inflation.
4. Money is the object of monetary regulation of the economy industrially developed countries based on the monetarist theory of money. In these countries, taking into account general economic problems, a monetary benchmark of change is set for a year (in Russia for a month) money supply and in accordance with it, its regulation is carried out using the credit instruments of the central bank. Monetary regulation, as a rule, is aimed at curbing the growth of the money supply, overcoming inflationary processes and stimulating the growth of GNP.
The main types of money: full (gold or silver) coins; defective coins; paper money (treasury notes); credit money (bill, check, banknote).
Credit money has undergone the following evolution: promissory note, banknote, check, electronic money, plastic cards.
Bill of exchange - a written obligation of the debtor (promissory note) or the order of the creditor to the debtor (bill of exchange - draft) to pay the amount indicated on it after a certain period of time to the creditor or a third party. Bills issued on the basis of the sale of goods on credit are called commercial. In addition, there are financial bills, those. debt obligations arising from the provision of a loan of a certain amount of money. A variety of them are treasury bills, for which the state is the debtor. Exists friendly bills, which are put up on top of each other for the purpose of their subsequent accounting in the bank.
Bronze, or blown, bills - debt obligations that do not have real security. The characteristic features of a bill are: abstractness - a specific type of transaction is not indicated on the bill; indisputability - obligatory payment of the debt up to the adoption of compulsory measures after the notary draws up an act of protest; negotiability - transfer of a bill of exchange as a means of payment to other persons with a transfer inscription on its turnover (giro or endorsement), which creates the possibility of mutual offset of bill of exchange obligations. The circular strength of a bill increases as the number of endorsements increases. But such promissory notes had limited circulation due to the lack of information about the solvency of zhirants (endorsers) (the person who puts a transfer note on the back of a bill, check, etc.).
The limited circulation of promissory notes was overcome with the help of bank acceptance of promissory notes, which received a payment guarantee from large banks. However, despite this, the use of the bill has its own limits: firstly, the bill serves only wholesale trade; secondly, in wholesale trade the balance of mutual claims is paid in cash; thirdly, a limited number of persons who are confident in the solvency of the drawer and endorsers (girants) are involved in the circulation of promissory notes.
The legal basis for the circulation of bills are the following bills of exchange conventions adopted by the Geneva Conference in 1930 1. Convention establishing a uniform law on bills of exchange and promissory notes. 2. A convention aimed at resolving certain conflicts of laws on bills of exchange and promissory notes. 3. Convention on Stamp Duty in Relation to Bills of Exchange and Promissory Notes. In Russia on March 11, 1997, the Federal Law “On Transfer and promissory note"Based on the Geneva Conventions of 1930.
Banknote - promissory note jar. Currently issued by the central bank through rediscounting of bills, lending to various credit institutions and the state. A banknote differs both from a bill of exchange and from paper money. A banknote differs from a bill of exchange: in terms of urgency - a bill of exchange is an urgent debt obligation, and a banknote is an indefinite debt obligation; under a guarantee - a bill is issued by an individual entrepreneur and has an individual guarantee; the banknote is currently issued by the central bank and has a government guarantee.
Classic banknote, i.e. changeable for metal, differs from paper money: by origin - paper money arose from the function of money as a medium of circulation; banknote - from the function of money as a means of payment; by the method of issue - paper money is put into circulation by the Treasury, banknotes - central bank; on return - classic banknotes, upon the expiration of the term of the promissory note under which they were issued, are returned to the central bank; paper money is not returned, but "stuck" in the circulation channels; by convertibility - the classic banknote, upon returning to the bank, was exchanged for gold or silver, paper money has always been irredeemable.
The mechanism of free exchange of banknotes (classic) for gold or silver eliminated their excessive number in circulation and depreciation. With the termination of the exchange of banknotes for gold, gold disappeared from the double collateral of banknotes (gold and credit), and credit, or promissory note, deteriorated significantly, as the central bank's promissory note portfolio is increasingly filled with treasury bills and obligations, as well as government bonds. Consequently, modern banknotes, although they are not redeemable for gold, to a certain extent retain the commodity, or credit, basis. However, due to their indispensability for metal, they fall under the laws of paper money circulation.
It is necessary to identify three emission channels modern banknotes: bank lending economy, which provides a connection between monetary circulation and the dynamics of reproduction of social capital; bank lending to the state, when banknotes are issued in exchange for government debt; an increase in official gold and foreign exchange reserves in countries with an active balance of payments.
Receipt - credit instrument of circulation, which appeared with the creation of commercial banks and the concentration of free funds on current accounts. Check - a written order of the owner of the current account to the bank to pay a certain amount of money to the check holder or to transfer it to another current account. The economic nature of a check is that, first, it serves as a means of receiving cash from a bank; secondly, it acts as a means of circulation and payment; thirdly, it is an instrument of non-cash payments. On the basis of checks, a system of non-cash settlements arose, in which most of the mutual claims are extinguished and payment is made according to the balance, without the participation of cash. This is especially true for settlements between clients of one bank. When making settlements between clients of different banks, a check (for the amount of the balance) is issued to the central bank or clearinghouse.
Mechanization and automation banking operations, the transition to the widespread use of computers led to the emergence of new methods of repayment or transfer of debt using electronic money. Electronic money- money in the accounts of computer memory of banks, the disposal of which is carried out using a special electronic device. On the basis of the introduction of computers in banking, it became possible to replace checks with plastic cards (debit and credit). It is a means of settlement that replaces cash and checks and also allows the owner to obtain a short-term loan from the bank. The plastic card is used in retail trade and services.
Monetary system- This is a form of organization of monetary circulation, which has historically developed in a particular country and is enshrined in national legislation.
V monetary systems includes:
1) the monetary unit of a particular country. At present, the Russian monetary system is based on the ruble, exchangeable for 100 kopecks;
2) the scale of prices, determined by the weight of the currency of the metal, adopted in the country as a monetary unit. At present, the scale of prices develops spontaneously and serves to measure the values of goods by means of prices;
3) types of state banknotes that have legal force, the procedure for their release and circulation (issue, withdrawal, etc.);
4) regulation of cashless circulation;
5) the procedure for exchanging the national currency for foreign (currency parity) and the state-regulated exchange rate;
6) government regulation monetary circulation. The procedure for securing banknotes is established by the legislation of countries, in particular, in Russia in the laws "On The central bank Russian Federation (Bank of Russia) "and" On banks and banking»It is established that commodity-material values can serve as collateral: gold and precious metals, freely convertible currency.
The legal basis for the functioning of the monetary system in Russia is determined Federal law"On the Central Bank of the Russian Federation (Bank of Russia)" dated April 26, 1995:
The official currency in our country is the ruble;
The Bank of Russia has the exclusive right to issue cash, organize its circulation and withdraw it on the territory of the Russian Federation; it is responsible for the state of monetary circulation in order to maintain normal economic activity in the country;
The ratio between the ruble and gold or other precious metals is not established by the Law, and the ruble exchange rate against foreign monetary units determined by the Central Bank of the Russian Federation;
The types of money that have legal payment force are banknotes and metal coins, which are secured by all the assets of the Bank of Russia, including the gold reserve, state securities, reserves of credit institutions held in the accounts of the Central Bank of the Russian Federation;
Samples of banknotes and coins are approved by the Bank of Russia;
Cash and non-cash are functioning on the territory of Russia.
There are two types of monetary systems: metallic money circulation, in which such a monetary product performs all the functions of money, and paper-credit money circulation, which is based on credit money.
Money supply- a set of cash and non-cash purchasing and payment means that ensure the circulation of goods and services that are at the disposal of individuals, enterprises (firms), organizations and the state.
In the structure of the money supply, there are active part - cash that actually serve the economic turnover; passive part - cash savings, account balances that can potentially serve as settlement funds.
The share of paper money in the total money supply is up to 25%, and the bulk of transactions between enterprises and organizations, even in retail, is done in a developed market economy by using bank accounts... At the same time, the structure of the money supply also includes such components that cannot be directly used as purchasing or means of payment... These are funds in time accounts, savings deposits in commercial banks, certificates of deposit, shares investment funds, etc.
The components of the money supply that cannot be directly used as a purchasing or means of payment are collectively called Quasi-money (from the Latin "quasi" - as if, almost) - funds in time accounts, savings deposits in commercial banks, other credit and financial institutions. "Quasi-money" is the most significant and rapidly growing part in the structure of money circulation. Economists call "quasi-money" liquid assets.
Liquidity is very important in defining money. Under liquidity any property or assets is understood as their ease of sale. Highly liquid types of property include: gold, other precious metals, precious stones, oil, works of art. Buildings and equipment have less liquidity (businessmen call them “frozen” funds). "Quasi-money" refers to liquid types of wealth because term deposits, bonds and some types of stocks can be quickly converted into cash.
In the structure of the money supply, aggregate components are distinguished, which are called monetary aggregates ... There is no single, universally accepted nomenclature of money supply aggregates. Its composition and structure are different in different countries and are determined by the level of development and the nature of the money market in each country, as well as the specifics of the policy pursued by its Central Bank.
The Central Bank of Russia (CBR) distinguishes four aggregates of the money supply - M 0, M 1, M 2, M 3.
Okun's Law is used most often when analyzing the economic situation. The scientist introduced this coefficient to characterize the ratio of the unemployment rate and the growth rate.
In 1962, Oaken deduced a pattern based on empirical data. Statistics have shown that a 1% rise in unemployment can lead to a fall in actual gross domestic product in line with potential GDP by 2%. This ratio is not constant and differs depending on the country and time period.
Thus, Okun's law represents the ratio of quarterly changes in the unemployment rate to real GDP.
Okun's Law Formula
The Okun's Law formula looks like this:
(Y ’- Y) / Y’ = c * (u - u ’)
Here Y is the real volume of GDP,
Y '- potential GDP,
u is the real unemployment rate,
u 'is the natural rate of unemployment,
c - Okun's coefficient.
Okun's coefficient since 1955 in the United States has usually been equated to 2 or 3.
This Okun law formula is used in rare cases, since the level of potential GDP and the unemployment rate are difficult indicators to estimate.
There is a second version of the Okun's law formula:
∆Y / Y = k - c * ∆u
Here Y is the actual production volume,
∆Y is the change in the actual level of production in comparison with the previous year,
∆u is the change in the actual unemployment rate in comparison with the previous year,
c - Okun's coefficient,
k is the average annual growth of production under the condition of full employment.
Criticism of Okun's Law
So far, the Okun's Law formula has not been recognized and has been criticized by many economists who question its usefulness in explaining market conditions.
Okun's law formula emerged as a result of processing statistical data, which are empirical observations. The law was not based on a solid theoretical basis, tested in practice, since Okun expressed the pattern only in the study of US statistics.
Statistics are approximate, and gross domestic product can be influenced by a large number of factors, not just one unemployment rate.
Nevertheless, this simplified consideration of the relationship of macroeconomic indicators can often be useful, as shown by Okun's research.
Features of Okun's Law
The scientist derived a coefficient that reflects the inverse relationship between the volume of production and the level of unemployment. Oaken believed that GDP growth of 2% is associated with the following shifts:
- a fall in cyclical unemployment by 1%;
- employment growth by 0.5%;
- an increase in the number of working hours of each employee by 0.5%;
- productivity growth by 1%.
It can be noted that by reducing Okun's cyclical unemployment rate by 0.1%, the expected rate of increase in real GDP will be 0.2%. But for different states and time periods, this value will vary, since the dependence was practically tested for GDP and GNP.
Examples of problem solving
EXAMPLE 1
| Exercise | Using Okun's law, calculate the volume of GDP that can be achieved in a state with a natural employment rate of 6%. Unemployment rate - 10%, Actual gross domestic product (GDP) - 7,500 billion rubles. |
| Solution | This problem can be solved using Okun's Law. The Okun's law formula shows that an excess of the actual unemployment rate over the natural rate of 1% will lead to a loss of 2% of the gross domestic product. Difference between actual and natural unemployment rate: That is, GDP lags behind the potential value by 8%. If we take the actual gross product as 100%, then we get the following result: 7,500 + 7,500 * 8/100 = 8,100 billion rubles. |
| Answer | 8100 billion rubles |
