The Macroeconomy. Private Choices, Public Actions, and Aggregate Outcomes. Michael B. McElroy. North Carolina State University

Transcription

1 The Macroeconomy Private Choices, Public Actions, and Aggregate Outcomes Michael B. McElroy North Carolina State University Originally published in 1996 by Prentice Hall (ISBN ). Chapter 1 has been substantially revised. Further revisions and updates are planned to give the book a more global emphasis by Michael B. McElroy mcelroy@ncsu.edu

2 THE MACROECONOMY Private Choices, Public Actions, and Aggregate Outcomes Michael B. McElroy PART I. MAPPING THE TERRITORY Chapter 1 Scarcity, Choices, & Outcomes 1.1 Scarcity... Where Economics Begins 1.2 Scarcity & the Production Possibility Frontier 1.3 Scarcity Dictates Choice 1.4 Scarcity and the Open Economy 1.5 Unemployment, Recession, and Economic Recovery 1.6 Scarcity and Choice in the Public Sector 1.7 Paying The Price for Public Goods 1.8 Economic Analysis: From Choices to Consequences 1.9 Overview 1.10 Review Questions 1.11 Further Reading Chapter 2 The Classical Model of the Macroeconomy 2.1 Introduction 2.2 Macroeconomics & the Keynesian Tradition 2.3 The Classical Tradition in Macroeconomics 2.4 Elements of the Classical Model 2.5 Four Implications of the Classical Model 2.6 Summary & Assessment 2.7 Overview 2.8 Review Questions 2.9 Further Reading PART II. BASIC MACROECONOMIC ANALYSIS Chapter 3 The Keynesian Model of Aggregate Demand 3.1 Introduction 3.2 What is "Aggregate Demand"? 3.3 The Consumption Function 3.4 The "Multiplier" Process 3.5 Refining the Multiplier 3.6 Some Words of Encouragement 3.7 Extending the Model of Aggregate Demand 3.8 Implications of the "IS Model" of Aggregate Demand 3.9 The Final Ingredients of Aggregate Demand -- Money Supply & Demand 3.10 The "IS-LM Model" of Aggregate Demand 3.11 Overview 3.12 Review Questions Chapter 4 The Expanded Model of Aggregate Demand & Supply 4.1 Introduction

3 4.2 From IS-LM to Aggregate Demand Curve 4.3 Adding a Simple Model of Aggregate Supply 4.4 Three Applications of the Expanded AD/AS 4.5 Stabilization Policy -- A First Look 4.6 A Quick Sketch of the Great Depression 4.7 A Comparison of Two Models 4.8 Overview 4.9 Review Questions Chapter 5 Fiscal Policy 5.1 Introduction 5.2 Fiscal Policy Basics 5.3 How Large Is the Government Deficit? 5.4 The Impact of Deficits on Current Economic Activity 5.5 Deficits, Debt, and the "Day of Reckoning" 5.6 Are the Deficits of the Nineties Sustainable? 5.7 If We Could Start Over... Should We Balance the Cash Flow Budget? 5.8 Overview 5.9 Review Questions 5.10 Further Reading Chapter 6 Monetary Policy 6.1 Introduction 6.2 What Gives Money Its Value? 6.3 Monetary Flexibility -- Benefits & Costs 6.4 Federal Reserve Control of the U.S. Money Supply 6.5 Monetary Policy -- Impacts on the "Real" Economy 6.6 Monetary Policy & Interest Rates 6.7 Today's Reflections of Tomorrow's Outcomes 6.8 Difficulties in Monetary Policy-Making 6.9 Monetary Control Over Which Money? 6.10 Monetary Policy and the Great Depression 6.11 Overview 6.12 Review Questions 6.13 Further Reading Chapter 7 International Trade 7.1 Introduction 7.2 Free Trade, Tariffs, & the Macroeconomy 7.3 Behind the Gains From Trade: Comparative Advantage 7.4 Is "Free Trade" Also "Fair" Trade? 7.5 Trading Currencies: The Foreign Exchange Market 7.6 Interest Rates, Exchange Rates, & the "Twin Deficits" 7.7 Balance & Imbalance in Foreign Trade 7.8 How Long Can A Trade Deficit Be Sustained? 7.9 Does the Form of the Capital Inflow Matter?

4 7.10 National Events -- International Consequences 7.11 Overview 7.12 Review Questions 7.13 Further Reading PART III. SMOOTHING BUSINESS CYCLES & CONTROLLING INFLATION Chapter 8 Macroeconomic Fluctuations 8.1 Introduction 8.2 The Role of Expectations in Economic Fluctuations 8.3 Expectations -- Why They Matter 8.4 Expectations -- How They Change 8.5 Can "Rational Misperceptions" Explain the Business Cycle? 8.6 Adding Fluctuations from the Supply Side 8.7 Adding Frictions to the Adjustment Process 8.8 A General Model of Economic Fluctuations 8.9 Overview 8.10 Review Questions 8.11 Further Reading Chapter 9 Stabilization Policy & the Phillips Curve 9.1 Introduction 9.2 Modern Times -- From Price Level to Inflation Rate 9.3 Phillips Curve Basics 9.4 Extending the Phillips Curve 9.5 The Vanishing Tradeoff 9.6 Policy Lags & Activist Stabilization 9.7 Does Stabilization Policy Cause Inflation? 9.8 Does Rising Inflation Today Bring Unemployment Tomorrow? 9.9 Overview 9.10 Review Questions 9.11 Further Reading Chapter 10 Inflation 10.1 Introduction 10.2 The Costs of Inflation 10.3 What Causes Inflation? 10.4 Why Would a Government Choose Inflation? 10.5 Reducing Inflation: Costs & Benefits 10.6 Monetary Policy & A Stable Inflation Rate 10.7 Overview 10.8 Review Questions 10.9 Further Reading Chapter 11 Unemployment 11.1 Introduction 11.2 An Overview of the Labor Market

5 11.3 Inside the "Natural" Rate of Unemployment 11.4 The Costs of Unemployment 11.5 Challenging the "Natural Rate Hypothesis" 11.6 Prospects for Reducing Unemployment 11.7 Overview 11.8 Review Questions 11.9 Further Reading PART IV. LONG RUN DYNAMICS: SAVING, INVESTMENT & GROWTH Chapter 12 Consumption, Saving & Investment 12.1 Introduction 12.2 Choosing the Best Consumption Path 12.3 How Far Ahead Do We Plan? 12.4 Fiscal Policy When Consumers Are Forward-Looking 12.5 What Determines the Rate of Capital Formation? 12.6 Overview 12.7 Review Questions 12.8 Further Reading Chapter 13 Capital Markets 13.1 Introduction 13.2 Elements of the Capital Market 13.3 Capital Markets & Monetary Policy 13.4 Capital Markets & Fiscal Policy 13.5 Globalization of Capital Markets 13.6 Overview 13.7 Review Questions 13.8 Further Reading Chapter 14 Economic Growth 14.1 Introduction 14.2 Economic Growth: How Important Is It? 14.3 The Neoclassical Model of Economic Growth 14.4 Empirical Models of Economic Growth 14.5 Why Has Productivity Growth Slowed? 14.6 Macroeconomic Policy & Economic Growth 14.7 Overview 14.8 Review Questions 14.9 Further Reading PART V. MODELS, MEASUREMENT & PERFORMANCE Chapter 15 Models & Measurement 15.1 Introduction 15.2 Measuring Macroeconomic Variables 15.3 Concepts Versus Measures 15.4 "Measuring" Connections Across Variables

6 Forecasting 15.6 Economic Forecasts & Common Sense 15.7 Overview 15.8 Review Questions 15.9 Further Reading Chapter 16 The Macroeconomy: Choices, Policies & Outcomes 16.1 Choices to Outcomes via Models 16.2 The Economic Role of Government 16.3 What Can Government Do? 16.4 What Should Government Do? 16.5 What Will Government Do? 16.6 Further Reading