Oil Shocks and other Determinants of Inflation in the US - 7150 Words

Oil Shocks and other Determinants of Inflation in the US (Dissertation Review Sample) Content: [Surname][Tutor][Course][Date]Oil Shocks and other Determinants of Inflation in the USAbstractThis paper provides an econometric analysis of inflation in the United States. It focuses on oil price shocks and other determinants of inflation. The researcher also explores the role of resource utilization, inflation expectations, and persistence, the roles of imports, financial markets, and unemployment among others. The paper will also include a cross-sectional analysis of inflation dynamics over episodes of persistent of large slack and slow inflation. The paper will focus on the period when the U.S experienced several periods of high inflation that have been partially attributed to positive oil price shocks, as well as, the responsiveness of the U.S inflation on oil price shock. Currently, economic theory that is supported by empirical data demonstrate that oil price shock can contribute to short run changes in inflation since inflation is seen as the average price of final goods produced in a given economy and the implications derived from an input price can differ from the Consumer Price Index (CPI) that is used to determine the average price of consumption. The findings of the study will reveal that, as oil price increases, the nominal value added falls whereas the domestic real value added remains at a constant rate; hence resulting to a short run deflation in value added measures, such as, the CPI. This means that CPI will experience rising inflation due to an increase in oil price. The papers findings will include periods of financial crises, stability of inflation expectations, and maintenance of real inflation. Table of ContentsAbstract.1Introduction..3Literature review...7Inflation model for US..9Econometric Methodology..19Discussion.21Conclusion26References28Appendix.32 1.0 IntroductionInflation in any economic environment depicts the constant rise in the overall price level of commodities and services for a specific period. Since a certain amount of currency purchases particular amount or quality of a good or service, inflation shows the decrease in the buying power per unit of the dollar. This generally accounts for value loss in exchange rates and economical records (Abel and Bernanke 2005). 1.1 The history of inflation in the U.SThe Great Inflation of the U.S was caused by an error in monetary policy and the Inflation Stabilization as a result of a restoration of a more effective monetary policy. Monetary policy was considered to be too accommodative during the period of the Great Inflation; hence, sizable inflations are considered not to have the capacity to endure such accommodations. However, earlier researchers do not attribute the Great Inflation to oil or commodity shocks or to other cost-push events per se (Sill, 2007). This was basically attributed to policy ignorance, and the historical accounts of the Great Inflation had various variants. The first variant is that policy makers, in the latter 1 960s, made attempts to exploit a pre-accelerationist Phillips curveonly to observe that over time, the short term relationship between inflation and unemployment was unstable, whereas the long-term Phillips curve was vertical. Therefore, the shift to a less accommodative Federal government policy reflected in an appositive real interest rate response that resulted into inflation news. On the other hand, there were some arguments that suggested that policy makers projected a rise in inflation, in order to, exploit a short-term Phillips curve in contrast with observed negative response of a short-term real interest rate to the inflation that was broadcasted prior to 1979. In addition, there was also a learning model that suggested that the U.S policy makers should have understood that by early 1970s. Therefore, the long-run Phillip curve was vertical. Inflation generally drifted higher during the time and exceeded the figures that were predicted, having allowed inflation to increase in the 1960s. This was aimed at improving economic growth because the U.S policy makers limited monetary tightening in the 1970s because it was believed that real economic activity and growth would slacken inflation. In 1980's, policy makers in the U.S, returned to an assessment that once prevailed in the 1950s based on an economic capacity to push the economy beyond a level that would quicken inflation and result to substantial and rapid costs.Fig 1: History of inflation in the U.S INCLUDEPICTURE "/images/charts/infl-chart-3-1-4.jpg" \* MERGEFORMATINET 
The quantity of the dollar supply in the United States showed changes from time to time. In the global historical period where gold was the major form of currency, the rate at which the gold coins are processed determined the supply of money and the value of each coin (Auernheeimer, 1974). For instance, the advancement of mixing gold and other cheaper metals to process coins enhanced money supply and promote the reduction of th e value of each coin. Therefore, as supply of money increased, the value of the same money reduced and, so people paid more for the same services that cost less when the supply was more restricted.In the United States, the Bureau of Labor Statistics monitors the percentage of inflation rates over the years, and the unit used is the Consumer Price Index (CPI) (Blanchard, 2006). The rates recorded from 1929 shows how the United States installed efforts to stimulate the economy hence tackle levels of inflation. In this year, the country experienced a serious fall of its stock markets that led to a great depression in the overall economy. The inflation rate recorded by the end of that year was 0.6% with a minimal rate of unemployment and low but steady developments experienced in the country. The next year recorded a negative contraction in the annual Gross Domestic Product (GDP) that tremendously reduced throughout 1932. This GDP contraction ended in around March, and the economical cy cle settled at a trough level when Black took over from Meyer as the Fed chairperson (Blanchard and Jordi, 2007).The United States economical expansion begun in 1935 until 1938 when the country experienced another contraction that ran until June the same year to a trough. There was an inflation rate of up to 3% and unemployment rates reduced to 16.9% in 1936 from 24.9 in 1933. In May 1937, economical depression reignited as the country reached a peak in the contractions before the Dust Bowl drought experienced between 1938 and 1939 (Oliver, 2010). During the Word War2, United States recorded economical expansions with inflation rates of about 9% due to the high government spending to fund the war. This drastically dropped to 2.3% in 1944 when the whole world recognized the US Dollar as the global currency. After the end of WW II, the U.S started a three-year economical expansion with a contraction of about 10.9% (Federal Reserve Bank of Boston). This was because of the reduced gove rnment spending and the minimal circulation of the dollar to help retain its value. The shaky trend of the American economical cycle continued due to the Cold War, the Korean War, the Cuban Missile, the invasion by the Bay of Pigs and other political issues that required government spending. Nevertheless, the economy expanded as well as recorded very low inflation rates until 1973. This trend pulled off when the dollar became off the gold standard; hence tripling the inflation rate from approximately 3% to 9% and about 12% in 1974. During this period, the economically cycle was at contraction and ended with a trough in March 1975 before picking up again (Mankiw, 2007). In 1982, St. Germaine established a Depository Act to help control recession. This led to a stable record of 3...

Pragmatic, Ethical, Moral Employments of Practical Reason - 275 Words

Pragmatic, Ethical and Moral Employments of Practical Reason (Other (Not Listed) Sample) Content: REMARKS ON DISCOURSE ETHICSNameCourseDateIntroductionThe book by Habermas, as translated by Ciaran Cronin, presents the most recent contribution to ethical theory, clarifying and expanding on discourse ethics. It comes in five chapters arranged in chronological order. The book commences with translators note and translators introductory note. Later on, it discuses topics such as On the Pragmatic, the Ethical, and the Moral Employment of Practical Reason, Remarks on Discourse Ethics, Neo-Aristotelianism and Lawrence Kohlberg, and Reflection on a Remark of Max Horkheimer. Lastly, an interview with Torben Hviid Nielsen focusing on topics such as the genesis of discourse ethics, its controversial elements, and interrelations with the communicative action theory concludes the book. Habermas defends the claim of discourse to a central positioning contemporary moral philosophy.Pragmatic, Ethical and Moral Employments of Practical ReasonThe first chapter provides a comprehe nsive examination of practical rationality that establishes a clear difference between ethical, pragmatic and moral questions. The section also distinguishes between spheres of practical discourses and forms of volition. Habermas elaborates and refines fundamental concepts of his approach and extends his argument in aspects such as treatment of rational reason and the challenges of motivation and application. He provides an excellent critique of competing positions such as those of Charles Taylor, Albrecht Wellmer, Bernard Williams and John Rawls. He also establishes the wide-ranging defense of discourse ethics.The book attempts to expound on the implication of communicative rationality in the scope of normative validity and moral understanding. It is a composite theoretical effort to reorganize the valuable ideas of Kantian deontological beliefs regarding the assessment of communicative structures. Hence, the book attempts to elaborate on the universal and essential nature of moral ity by conjuring the global responsibility of communicative rationality. Habermas believes that justifying the validity of moral standards can be effected in a way comparable to the rationalization of facts. The whole project uses the reasonable construction of moral intuition. In his work, Habermas goal is to find a middle ground between the relativistic implications of contextualizes and communitarian position of Hegel and Aristotle and abstract universalism. He undertakes an elaborate defense of discourses of ethics against its skeptics from the neo-Aristotelian camp.After identifying different types of discourse, Habermas goes ahead and explain how the two interrelate. From the book, it is clear that several discussions depend on each other. The most obvious one is ethical and moral discourses that somewhat rely on empirical claims hence depending on the result of practical discourses regarding situations and the consequences of behavioral laws and the shared pursuit of decent l ife. Habermas rejects the notion of a meta-discourse that sorts out the boundary matters.On addressing the theory of communicative actions, Habermas believes that it lies on the idea that social order is contingent upon the ability of the players to identify and understand the inter-subjective soundness of varying assertions on which social collaboration relies. Consequently, Habermas elaborates the cognitive and rational character used to conceive the cooperation in regards to efficacy claims. He argues that to identify the validity of claims is to imagine that worthy reason can be justified in case of criticism. Habermas refers the theory of discourse or argumentation as the reflective communicative deed.Furthermore, Habermas suggests a multi-variant conception of reason that depicts itself in varying form of cognitive validity both in actuality and rightness claims relating to the treatment we owe others, technical-practical claims concerning the means of achieving our goals and factual allegations relating to good life amongst others. Habermas recognizes that the surface grammar of speech acts does not suit to found this collection of validity. Therefore, he proposes that we must supplement semantic analysis with practice analysis of varying argumentative discourse to ground the multi-dimensional validity claims.But the model involved in learning different traditions is open to several objections including; that it is too selective. The recognition of the rational superiority of alien culture may sufficiently motivate ones tradition if the learning subject can compare the explanatory power. However, in the book, MacIntyre posits that, if leaning from foreign culture is feasible, the two traditions must be able to communicate with each other without assuming universal standards of rationality. Maclntyre experiences essential inaccessibility which he delivers to readers in a third language. However, Maclntyre posits that the fact that the knowledge of untr anslatability is expressible should raise concerns.In the book, Habermas quotes Guenther Patzig and states that moral judgment differs from ethical decision only in their degree of contextually. Deontological ethical theories assume that moral issues arise in circles of subjects capable of action and speech because we depend on consensus and cooperation of others. We direct our moral judgments and feeling to animals which arent capable of speech. Conversely, animals cannot enter into reciprocity relationship with a human being. Patzig agrees that humans have duties towards animals but animals do not have obligations towards people hence humans need to protect animalsThe various contentious discussions should be inter-subjectively justified. Regardless if Habermas theory of meaning thrives or not, the discursive scrutiny of validity shows the vital variances in arguments requires that we come with varying forms of legitimate claims. Habermas argues that such kind of validity is sepa rate from other ways, only if someone can prove that its discursive justification includes characteristics that separate it from different types of explanations. Hence, the discourse theory by Habermas assumes that the cognitive topic of argumentation defines the particular argumentative practice suitable for such validation. Thus, the discourse theory requires logical analysis of arguments as a social practice. Habermas presumes that one cannot comprehensively articulate normative presupposition solely on valid properties of arguments. Somewhat, he/she must distinguish argument as a procedure, a product and as a process. It is evident that Habermas regards these perspectives as constituting the practical idea of cogency.Lawrence Kohlberg and Neo-AristotelianismThe book also focuses on Lawrence Kohlberg theory of moral development based on his believes that person advance in their ethical thinking through a sequence of six identifiable stages: punishment and obedience, individualis m, instrumentalism and exchange, good, social contract and principled conscience. In the initial stage, individuals behave according to socially tolerable norms. The second level is readily available in the society while the majority does not reach the third level. Stage five is a comprehension of social mutuality, and stage six bases on respect for global principle and demands of personal conscience. The book summarizes the objections against moral theories of the Kantian type as follows: they make an abstract differentiation between good and right unavoidable leading to abstraction from motivations. More so, the cognitivist privileging raises critical questions of the application of norms while the formalist leads to abstraction from ethical life that assumes concrete forms within a particular type of life.Following articles by Tulum, Habermas considers most argumentations as final resting on implicative discussions whose findings dont follow deductive certainty but less plausibl e. The logical power of such kinds of arguments relies on consideration of all possible objections and information. However, critical testing of competing cases relies on the rhetorical value of the convincing process. Habermas considers the rhetorical levels regarding the highly idealized property of communication; presented as ideal speech situation he suggests that a perfect situation should have real discourses measuring up to motifs that he employs.Discourse EthicsHabermas defines the notion of adequate rhetorical process as a combination of indispensable yet practical presuppositions that persons should make if they have to consider the real implementation of dialectical procedures as a sufficient fundamental test. He goes further and identifies the four presuppositions namely: participants have an equal voice, no exclusion of anyone who can make relevant contributions, honest of opinion free from self-deception and deceit and finally, no coercion in the procedures of discours e. These conditions are counterfactual since actual conversations can never achieve noncoercion, full inclusion, and equality. Hence, Habermas advocates for measuring all relevant arguments reasonably, weighing discussion on merit and the pursuit of truth.As an understanding of the periphrastic viewpoint, Habermas formal model does not do fairness to the central abundance of the rhetorical practice. However, he argues that a person can complement his/her design with Aristotles substantive rhetoric that bases on pathos and ethos. The book discusses that A rhetorical perspective deals with crafting discourses for their capability to place the audience in proper social-psychological space for making an accountable judgment.On differentiation of argumentative disco...