1. SYNDICATE 5
Case Study
The US In 2001 :
Macroeconomic Policy and The New Economy
M.Ridwan - 29112555
Machadi Dhana – 29112303
M. Khadafi – 29112324
Pedro Putu Wirya – 29112565
Seto Kusparyanti – 29112306
Yuliani Dewi – 29112321
Rahdianto Maulana - 29112554
2. Background History
Technological Innovation and Organizational
Changes and public policy, drive what they
called New Economic, raised the efficiency of
production capacity.
But in early 2001, it show the symptom
emerging weakness
Business and confidence level down, the Fed
respond by lowering interest rate. This action
is to encourage investment.
The result, inflation remain low and US Dollar
remain strong among other currency
3. Supporting factor of New Economy
New Economy is strong because it is based on business system that works :
It drives out inefficiency
Focus on intelligent
Business process re-engineering
Those 3 factor also supported by :
Easy capital access
MBA graduates which become entrepreneur
Emerging Internet, which enable to achieve very efficient business
Lower interest rate to encourage investment
These lead to the cost down, and impacted to the increase of inflation
4. Why it happen ?
The graphic of Investment Saving and Liquidity Money Supply
5. Potential Risk of New Economy
Unexpected slowdown on productivity growth
Investment boom lead to over-invested capital
stock
Capital flow from abroad may dry up
Ongoing adjustment in financial market to the
perception of a riskier economic market
6. Conclusion
The risk of New Economy cannot be avoided
by just lowering the interest rate, but also
supported by other policies, such as lowering
the tax.
The government also need to pay attention to
the fiscal policy multiplier effect :
Government spending, Tax, and Balance
budget. This multiplier can impacted to
equilibrium effect of output.