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The Modelling of Antirecessionary Measures in the USA during the Crisis of 2007-2008

Student: Ekaterina Trapeznikova

Supervisor: Nikolay Pilnik

Faculty: Faculty of Economic Sciences

Educational Programme: Bachelor

Final Grade: 10

Year of Graduation: 2014

<p>The paper is devoted to one of the greatest events in the world economy during the last decade &ndash; the economic crisis of 2007-2008. The object of the research is the economy of the USA, because it is the very country where the origin of the latest recession lies. Although problems at the mortgage market were the trigger of the crisis, it quickly spread throughout the whole American economy and influenced all macroeconomic agents and all spheres of life. Furthermore, it rapidly transformed from a recession of just one country into a global worldwide problem whose consequences are still felt today. That is why the considered topic is so important.</p><p>As in many other countries, the government of the USA introduced many antirecessionary programs, which cost billions of dollars, in order to mitigate the terrible aftermath of the crisis. The main goal of this paper is to analyze of antirecessionary measures from the point of view of their impact on the economy of the USA.</p><p>The paper is organized as follows. The first chapter is devoted to the main scientific papers about the crisis, as well as some general information about the causes of the crisis and its beginning. Chapter 2 contains a brief description of the consequences of the recession, the key antirecessionary programs and their unification into more heterogeneous groups. In chapter 3 a formal mathematical model is considered, the paths of the main variables are derived. In the next chapter the balances of macroeconomic agents are shown, because these data are necessary for the empirical research. The last chapter is devoted to the modelling of antirecessionary measures and the analysis of their impact on the American economy.</p><p>The main conclusions about the influence of antirecessionary measures on the economy of the USA are the following.</p><p style="margin-left:71.45pt;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Support of nonfinancial companies and commercial banks.</strong></p><p style="margin-left:71.45pt;">The programs helped to avoid the biggest drop in the total output, 35% and 7%, accordingly. In many ways it can be explained by the fact that the largest amount of money was spent on these two programs. Besides, the support of firms and banks is more important, than the support of consumers.</p><p style="margin-left:71.45pt;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Reduction of taxes.</strong></p><p style="margin-left:71.45pt;">These programs made the smallest contribution to the GDP, because not much money was spent on them. Also, taxes do not influence total output directly.</p><p style="margin-left:71.45pt;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Additional government spending and the purchase of government bonds.</strong></p><p style="margin-left:71.45pt;">These measures influenced the output considerably. What is more, the cost of these programs was less, than the positive contribution they made. It helps to say that they were very efficient.</p><p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; It is shown in the paper that in the short run antirecessionary measures had a positive effect on the American economy. Nevertheless, the current economic position of the USA is far from being optimistic (high government debt, depression of the real sector). It is not right to say that the American government made a mistake in antirecessionary programs, because nobody knows what the economy had looked like without these measures. The latest crisis showed many theories in action and gave economists a lot of useful experience that can be used in future.</p><p>&nbsp;</p><p>e-mail: <a href="mailto:layner4@yandex.ru">layner4@yandex.ru</a></p><p>mobile telephone.: +7 (915) 4752765</p><p>&nbsp;</p>

Full text (added May 26, 2014) (408.68 Kb)

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