core econ

developmental state

where the government takes a leading role in promoting economic development through investments, subsidies, education, policies

industrial revolution

wave of technological advances and organisational changes in 18th century

if you think based on work : yes, if you think based on birth environment : no

visualise it im too lazy

crisis 2008

high unemployment and inequality, low inflation

gov. policy great depression

roosevelt: leave the gold standard, gov. spending, reform banks

changes in economic policymaking and regulation: govts provided reassurance that policy would support aggregate demand if necessary, workers more power, Bretton Woods System, fixed exchange rates, postwar accord

implementing policies : cuts in worker power, supply side reforms, restricted fiscal and monetary policy,

falling real estate prices, fear --> no consumption, no policy, globalisation

allocations

descripion of who does, gets what and consequences

pareto-efficient allocation

nobody can be made better off without making someone worse off

substantive judgement

inequality of final outcomeprocedural judgement

procedural judgement

inequality of how the outcome came about

steps to help standardising fairness

1. swapping places does not affect fairness 2. veil of ignorance

power

the ability to get what you want in opposition to others

bargaining power

the extent someone can ensure a larger share for themselves with an interaction

conditions for working markets

private property, institutions, social norms, complete contracts

market failure

when markets allocate in a pareto-inefficient way

missing markets

when there is not market for externalities

external effects

cost and benefits that are not incorporated in decision-making

marginal social costs

m. private costs + m. social costs

solutions to external effects

private bargaining, government policy (pigouvian tax, regulation, compensation, right to …(no noise))

solutions to asymmetric information

new products, markets, incentives; mandatory insurance, equity

market inefficiencies

asymmetric information and external effects

two types of asymmetrical information

hidden action (moral hazard) and hidden attribute (adverse selection)