The Covid-19 pandemic as well as Brexit has severely disrupted worldwide supply chains. This disruption has forced many domestic producers to source essential inputs from local, more expensive suppliers instead of foreign, cheaper ones. (i) Discuss, and illustrate (using the WS-PS model and Phillips Curve model) how this supply shock is likely to impact the labour market and inflation expectations moving forward. (ii) Provide an example of a supply-side policy that you think government could pursue in an attempt to reduce these supply-side impacts from Covid and Brexit.
The Covid-19 pandemic as well as Brexit has severely disrupted worldwide supply chains. This disruption has forced many domestic producers to source essential inputs from local, more expensive suppliers instead of foreign, cheaper ones. (i) Discuss, and illustrate (using the WS-PS model and Phillips Curve model) how this supply shock is likely to impact the labour market and inflation expectations moving forward. (ii) Provide an example of a supply-side policy that you think government could pursue in an attempt to reduce these supply-side impacts from Covid and Brexit.
Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles
Section: Chapter Questions
Problem 19E
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The Covid-19 pandemic as well as Brexit has severely disrupted worldwide supply chains. This disruption has forced many domestic producers to source essential inputs from local, more expensive suppliers instead of foreign, cheaper ones.
(i) Discuss, and illustrate (using the WS-PS model and
(ii) Provide an example of a supply-side policy that you think government could pursue in an attempt to reduce these supply-side impacts from Covid and Brexit.
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