Kaldor's Six Stylised Facts and the Central Banker Question

This article discusses the intersection between Kaldor's six stylised facts and the central banker question. It also explores the role of Federal Reserve and its oversight by the public. The article highlights the disparities in productivity and hourly compensation growth and how it affects the economy.

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Running Head: ECONOMIC ASSIGNMENT
Economic Assignment
Student’s Name
Instructor’s Name

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ECONOMIC ASIGNMENT
Much has been argued about Kaldor’s six stylised facts. These are six theories that
describe the economic growth in a nation. In the theories, Kaldor did not claim that any of the
quantities would be constant at all times in history (Wiles, 2015). To the contrary, he argued that
income shares and growth rates fluctuate over a certain business cycle. In regard to the central
banker question chart on the protester’s t-shirts, the data intersect with some of the Kaldor's
statements. In particular, the chart describes below-target inflation, flat wages and rising EPOP
scenarios. It describes the disparities in productivity and hourly compensation growth from 1948
to 2017.
Examining the chart closely, Kaldor’s statements 1 and 2 totally intersects with the
details. The chart describes a constant increase in the outputs/productivity in the period 1948-
2017. This is in agreement with Kaldor’s first statement which argued that output per worker
grows at a constant rate over a long period of time (Wiles, 2015). The second statement argued
that growth of capital per worker over a period of time is constant. This fully conforms to the
chart. The two statements are in conformity with details on the chart.
However, focusing on the two curves on the protester's chart, one curve contain the
information that is already on Kaldor's statements. The other curve (the red curve) indicates that
the hourly compensation is not growing at a constant from 1975 to 2017. In other words, the
hourly compensation does not increase at a constant rate with the productivity rate over a long
period of time. This information should be added to the Kaldor's statements since it is not
captured in his economic facts. The disparities might be as a result of adoption of alternatives
and efficient production mechanisms in the economies. Various innovations have been
developed which in this regard has influenced the chart on the t-shirt.

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ECONOMIC ASIGNMENT
The United States public exert a minimal oversight role to the Federal Reserve System.
The system is required to work within the objectives established by Congress. Congress has,
however, given Federal Reserve the independence to carry out its tasks out of any political
pressure. Little oversight of Fed by the public is specifically because the public expects Federal
Reserve to be in a position to raise or lower the rates in the banks across the country. Another
reason for the oversight is in the current economy the inflation rates are very high and the central
bank is not dong much to prevent the economy from overheating (Mathonnat &Minea, 2018).
Federal Reserve is supposed to be a powerful lever to guide the economy pace but nowadays that
is not the case. In another word, the public only felt the hardship of the economy but cannot do
anything apart from mandating the Congress in the oversight roles.

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ECONOMIC ASIGNMENT
References
Mathonnat, & Minea, A. (2018). Financial development and the occurrence of banking
crises. Journal of Banking & Finance.
The Central Banker Question-Episode 864. (2018, September 25). Retrieved from
https://www.npr.org/sections/money/2018/09/14/647979229/episode-864-the-central-
bankers-question
Wiles. W. (2015). Federal Reserve System. The Journal of Finance, 71(3), 1027-1070.