Introduction
Credit
Dedication
About The Authors
Preface
Supplements and Media
Introduction
1 The Science of Macroeconomics
1.1 What Macroeconomists Study
1.2 How Economists Think
1.3 How This Book Proceeds
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
2 The Data of Macroeconomics
2.1 Measuring the Value of Economic Activity: Gross Domestic Product
2.2 Measuring the Cost of Living: The Consumer Price Index
2.3 Measuring Joblessness: The Unemployment Rate
2.4 Conclusion: From Economic Statistics to Economic Models
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Classical Theory: The Economy in the Long Run
3 National Income: Where It Comes From and Where It Goes
3.1 What Determines the Total Production of Goods and Services?
3.2 How Is National Income Distributed to the Factors of Production?
3.3 What Determines the Demand for Goods and Services?
3.4 What Brings the Supply and Demand for Goods and Services Into Equilibrium?
3.5 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
4 Money and Inflation
4.1 What Is Money?
4.2 The Quantity Theory of Money
4.3 Seigniorage: The Revenue from Printing Money
4.4 Inflation and Interest Rates
4.5 The Nominal Interest Rate and the Demand for Money
4.6 The Social Costs of Inflation
4.7 Hyperinflation
4.8 Conclusion: The Classical Dichotomy
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: The Cagan Model: How Current and Future Money Affect the Price Level
More Problems and Applications
5 The Open Economy
5.1 The International Flows of Capital and Goods
5.2 Saving and Investment in a Small Open Economy
5.3 Exchange Rates
5.4 Large Versus Small Open Economies
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: The Open Economy in the Very Long Run
More Problems and Applications
6 Unemployment
6.1 Job Loss, Job Finding, and the Natural Rate of Unemployment
6.2 Job Search and Frictional Unemployment
6.3 Real-Wage Rigidity and Structural Unemployment
6.4 Labour Market Experience: Canada
6.5 Labour Market Experience: Europe
6.6 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Unemployment, Inequality, and Government Policy
More Problems and Applications
Growth Theory: The Economy in the Very Long Run
7 Economic Growth I: Capital Accumulation and Population Growth
7.1 The Accumulation of Capital
7.2 The Golden Rule Level of Capital
7.3 Population Growth
7.4 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
8 Economic Growth II: Technology, Empirics, and Policy
8.1 Technological Progress in the Solow Model
8.2 From Growth Theory to Growth Empirics
8.3 Policies to Promote Growth
8.4 Beyond the Solow Model: Endogenous Growth Theory
8.5 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Accounting for the Sources of Economic Growth
More Problems and Applications
Business Cycle Theory: The Economy in the Short Run
9 Introduction to Economic Fluctuations
9.1 Time Horizons in Macroeconomics
9.2 Aggregate Demand
9.3 Aggregate Supply
9.4 Stabilization Policy
9.5 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
10 Aggregate Demand I: Building the IS–LM Model
10.1 The Goods Market and the IS Curve
10.2 The Money Market and the LM Curve
10.3 Conclusion: The Short-Run Equilibrium
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
11 Aggregate Demand II: Applying the IS–LM Model
11.1 Explaining Fluctuations With the IS–LM Model
11.2 IS–LM as a Theory of Aggregate Demand
11.3 The Great Depression
11.4 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Aggregate Demand Theory Without the LM Curve
12 The Open Economy Revisited: The Mundell–Fleming Model and the Exchange-Rate Regime
12.1 The Mundell–Fleming Model
12.2 The Small Open Economy Under Floating Exchange Rates
12.3 The Small Open Economy Under Fixed Exchange Rates
12.4 Interest-Rate Differentials
12.5 Should Exchange Rates Be Floating or Fixed?
12.6 From the Short Run to the Long Run: The Mundell–Fleming Model With a Changing Price Level
12.7 A Concluding Reminder
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Extensions to the Mundell-Fleming Model
More Problems and Applications
13 Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment
13.1 The Basic Theory of Aggregate Supply
13.2 Inflation, Unemployment, and the Phillips Curve
13.3 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: A Big, Comprehensive Model
More Problems and Applications
14 A Dynamic Model of Aggregate Demand and Aggregate Supply
14.1 Elements of the Model
14.2 Solving the Dynamic Model
14.3 Using the Model
14.4 Two Applications: Lessons for Monetary Policy
14.5 Conclusion: Toward DSGE Models
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Components of the Synthesis
Macroeconomic Policy Debates
15 Stabilization Policy
15.1 Should Policy Be Active or Passive?
15.2 Should Policy Be Conducted by Rule or by Discretion?
15.3 Conclusion: Making Policy in an Uncertain World
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Time Inconsistency and the Tradeoff Between Inflation and Unemployment
More Problems and Applications
16 Government Debt and Budget Deficits
16.1 The Size of the Government Debt
16.2 Problems in Measurement
16.3 The Traditional View of Government Debt
16.4 The Ricardian View of Government Debt
16.5 Other Perspectives on Government Debt
16.6 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Appendix: Estimating the Benefits of Deficit and Debt Reduction
More on the Microeconomics Behind Macroeconomics
17 Consumption
17.1 John Maynard Keynes and the Consumption Function
17.2 Irving Fisher and Intertemporal Choice
17.3 Franco Modigliani and the Life-Cycle Hypothesis
17.4 Milton Friedman and the Permanent-Income Hypothesis
17.5 Robert Hall and the Random-Walk Hypothesis
17.6 David Laibson and the Pull of Instant Gratification
17.7 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
18 Investment
18.1 Business Fixed Investment
18.2 Residential Investment
18.3 Inventory Investment
18.4 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
19 Money Supply and Money Demand
19.1 Money Supply
19.2 Money Demand
19.3 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
20 The Financial System: Opportunities and Dangers
20.1 What Does the Financial System Do?
20.2 Financial Crises
20.3 Conclusion
Summary
KEY CONCEPTS
QUESTIONS FOR REVIEW
PROBLEMS AND APPLICATIONS
Introduction
The Four Most Important Lessons of Macroeconomics
The Four Most Important Unresolved Questions of Macroeconomics
Conclusion
Glossary