1. Lectures in Macroeconomics- Charles W. Upton What Business Cycles Cost Us Part 2

2. What Business Cycles Cost Us Part 2 The Immortal Consumer

3. What Business Cycles Cost Us Part 2 Two Changes c is uncertain, the weights are declining

4. What Business Cycles Cost Us Part 2 Two Changes c is uncertain, the weights are declining U is uncertain, but we can compute expected utility

5. What Business Cycles Cost Us Part 2 Two Changes c is uncertain, the weights are declining U is uncertain, but we can compute expected utility Lets call that U now

6. What Business Cycles Cost Us Part 2 Expected Utility Suppose we could avoid business cycles

7. What Business Cycles Cost Us Part 2 Expected Utility Suppose we could avoid business cycles

8. What Business Cycles Cost Us Part 2 Expected Utility

9. What Business Cycles Cost Us Part 2 Expected Utility Lets call that U no-cycle

10. What Business Cycles Cost Us Part 2 The Question U now < U no-cycle How much of an increase in consumption?

11. What Business Cycles Cost Us Part 2 How Big an Increase

12. What Business Cycles Cost Us Part 2 Expected Utility Lets call that U

13. What Business Cycles Cost Us Part 2 The Question U now < U no-cycle And, for some value of U = U no-cycle

14. What Business Cycles Cost Us Part 2 The Question U now < U no-cycle And, for some value of U = U no-cycle This gives us the benefit from eliminating uncertainty

15. What Business Cycles Cost Us Part 2 The Answer  0.015

16. What Business Cycles Cost Us Part 2 The Answer  0.015 Eliminating business cycles is worth as much as a 1.5% increase in consumption.

17. What Business Cycles Cost Us Part 2 The Answer  0.015 Eliminating business cycles is worth as much as a 1.5% increase in consumption. Since C runs about $7,000 billion per year, this is equal to about $105 billion per year.

18. What Business Cycles Cost Us Part 2 End ©2006 Charles W. Upton. All rights reserved