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Macro economics / Charles I. Jones, Stanford University, Graduate School of Business.

By: Jones, Charles I.
Material type: TextTextPublisher: New York, NY : W. W. Norton & Company, Inc., 2018Edition: 4th edition. Int. student ed.Description: xxiii, 616 pages ; 27 cm.ISBN: 9780393615333.Subject(s): Macroeconomics | EconomicsDDC classification: 339
Contents:
Machine generated contents note: 1.Introduction to Macroeconomics -- 1.1.What Is Macroeconomics? -- 1.2.How Macroeconomics Studies Key Questions -- 1.3.An Overview of the Book -- The Long Run -- The Short Run -- Issues for the Future -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 2.Measuring the Macroeconomy -- 2.1.Introduction -- 2.2.Measuring the State of the Economy -- Production = Expenditure = Income -- The Expenditure Approach to GDP -- The Income Approach to GDP -- The Production Approach to GDP -- What Is Included in GDP and What's Not? -- 2.3.Measuring Changes over Time -- A Simple Example: Where Real GDP Doesn't Change -- A Second Example: Where Real GDP Changes -- Quantity Indexes: Laspeyres, Paasche, and Chain Weighting -- Price Indexes and Inflation -- Using Chain-Weighted Data -- 2.4.Comparing Economic Performance across Countries -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise Note continued: 3.An Overview of Long-Run Economic Growth -- 3.1.Introduction -- 3.2.Growth over the Very Long Run -- 3.3.Modern Economic Growth -- The Definition of Economic Growth -- A Population Growth Example -- The Rule of 70 and the Ratio Scale -- U.S. GDP on a Ratio Scale -- Calculating Growth Rates -- 3.4.Modern Growth around the World -- A Broad Sample of Countries -- 3.5.Some Useful Properties of Growth Rates -- 3.6.The Costs of Economic Growth -- 3.7.A Long-Run Roadmap -- 3.8.Additional Resources -- Summary -- Growth Rules -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 4.A Model of Production -- 4.1.Introduction -- 4.2.A Model of Production -- Setting Up the Model -- Allocating Resources -- Solving the Model: General Equilibrium -- Interpreting the Solution -- 4.3.Analyzing the Production Model -- Comparing Models with Data -- The Empirical Fit of the Production Model -- Productivity Differences: Improving the Fit of the Model Note continued: 4.4.Understanding TFP Differences -- Human Capital -- Technology -- Institutions -- Misallocation -- 4.5.Evaluating the Production Model -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 5.The Solow Growth Model -- 5.1.Introduction -- 5.2.Setting Up the Model -- Production -- Capital Accumulation -- Labor -- Investment -- The Model Summarized -- 5.3.Prices and the Real Interest Rate -- 5.4.Solving the Solow Model -- Using the Solow Diagram -- Output and Consumption in the Solow Diagram -- Solving Mathematically for the Steady State -- 5.5.Looking at Data through the Lens of the Solow Model -- The Capital-Output Ratio -- Differences in YIL -- 5.6.Understanding the Steady State -- 5.7.Economic Growth in the Solow Model -- Meanwhile, Back on the Family Farm -- 5.8.Some Economic Experiments -- An Increase in the Investment Rate -- A Rise in the Depreciation Rate -- Experiments on Your Own Note continued: 5.9.The Principle of Transition Dynamics -- Understanding Differences in Growth Rates -- 5.10.Strengths and Weaknesses of the Solow Model -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 6.Growth and Ideas -- 6.1.Introduction -- 6.2.The Economics of Ideas -- Ideas -- Nonrivalry -- Increasing Returns -- Problems with Pure Competition -- 6.3.The Romer Model -- Solving the Romer Model -- Why Is There Growth in the Romer Model? -- Balanced Growth -- Experiments in the Romer Model -- Growth Effects versus Level Effects -- Recapping Romer -- 6.4.Combining Solow and Romer: Overview -- 6.5.Growth Accounting -- 6.6.Concluding Our Study of Long-Run Growth -- 6.7.A Postscript on Solow and Romer -- 6.8.Additional Resources -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 6.9.Appendix: Combining Solow and Romer (Algebraically) -- Setting Up the Combined Model -- Solving the Combined Model Note continued: Long-Run Growth -- Output per Person -- Transition Dynamics -- More Exercises -- 7.The Labor Market, Wages, and Unemployment -- 7.1.Introduction -- 7.2.The U.S. Labor Market -- The Dynamics of the Labor Market -- 7.3.Supply and Demand -- A Change in Labor Supply -- A Change in Labor Demand -- Wage Rigidity -- Different Kinds of Unemployment -- 7.4.The Bathtub Model of Unemployment -- 7.5.Labor Markets around the World -- Hours of Work -- 7.6.How Much Is Your Human Capital Worth? -- Present Discounted Value -- Your Human Capital -- 7.7.The Rising Return to Education -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 8.Inflation -- 8.1.Introduction -- 8.2.The Quantity Theory of Money -- Measures of the Money Supply -- The Quantity Equation -- The Classical Dichotomy, Constant Velocity, and the Central Bank -- The Quantity Theory for the Price Level -- The Quantity Theory for Inflation -- Revisiting the Classical Dichotomy Note continued: 8.3.Real and Nominal Interest Rates -- 8.4.Costs of Inflation -- 8.5.The Fiscal Causes of High Inflation -- The Inflation Tax -- Central Bank Independence -- 8.6.The Great Inflation of the 1970s -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 9.An Introduction to the Short Run -- 9.1.Introduction -- 9.2.The Long Run, the Short Run, and Shocks -- Trends and Fluctuations -- Short-Run Output in the United States -- Measuring Potential Output -- The Inflation Rate -- 9.3.The Short-Run Model -- A Graph of the Short-Run Model -- How the Short-Run Model Works -- The Empirical Fit of the Phillips Curve -- Summary -- 9.4.Okun's Law: Output and Unemployment -- 9.5.Filling in the Details -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 10.The Great Recession: A First Look -- 10.1.Introduction -- 10.2.Recent Shocks to the Macroeconomy -- Housing Prices -- The Global Saving Glut Note continued: Subprime Lending and the Rise in Interest Rates -- The Financial Turmoil of 2007-2009 -- Oil Prices -- 10.3.Macroeconomic Outcomes -- A Comparison to Previous Recessions -- Inflation -- The Rest of the World -- 10.4.Some Fundamentals of Financial Economics -- Balance Sheets -- Leverage -- Bank Runs and Liquidity Crises -- Financial Wrap-Up -- 10.5.Going Forward -- Summary -- Key Concepts -- Review Questions -- Exercises -- 11.The IS Curve -- 11.1.Introduction -- 11.2.Setting Up the Economy -- Consumption and Friends -- The Investment Equation -- 11.3.Deriving the IS Curve -- 11.4.Using the IS Curve -- The Basic IS Curve -- The Effect of a Change in the Interest Rate -- An Aggregate Demand Shock -- A Shock to Potential Output -- Other Experiments -- 11.5.Microfoundations of the IS Curve -- Consumption -- Multiplier Effects -- Investment -- Government Purchases -- Net Exports -- 11.6.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises Note continued: Worked Exercises -- 12.Monetary Policy and the Phillips Curve -- 12.1.Introduction -- 12.2.The MP Curve: Monetary Policy and Interest Rates -- From Nominal to Real Interest Rates -- The IS-MP Diagram -- Example: The End of a Housing Bubble -- 12.3.The Phillips Curve -- Price Shocks and the Phillips Curve -- Cost-Push and Demand-Pull Inflation -- 12.4.Using the Short-Run Model -- The Volcker Disinflation -- The Great Inflation of the 1970s -- The Short-Run Model in a Nutshell -- 12.5.Microfoundations: Understanding Sticky Inflation -- The Classical Dichotomy in the Short Run -- 12.6.Microfoundations: How Central Banks Control Nominal Interest Rates -- Changing the Interest Rate -- Why it instead of Mt? -- 12.7.Inside the Federal Reserve -- Conventional Monetary Policy -- Open-Market Operations: How the Fed Controls the Money Supply -- 12.8.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises Note continued: 13.Stabilization Policy and the AS/AD Framework -- 13.1.Introduction -- 13.2.Monetary Policy Rules and Aggregate Demand -- The AD Curve -- Moving along the AD Curve -- Shifts of the AD Curve -- 13.3.The Aggregate Supply Curve -- 13.4.The AS/AD Framework -- The Steady State -- The AS/AD Graph -- 13.5.Macroeconomic Events in the AS/AD Framework -- Event #1: An Inflation Shock -- Event #2: Disinflation -- Event #3: A Positive AD Shock -- Further Thoughts on Aggregate Demand Shocks -- 13.6.Empirical Evidence -- Predicting the Fed Funds Rate -- Inflation-Output Loops -- 13.7.Modern Monetary Policy -- More Sophisticated Monetary Policy Rules -- Rules versus Discretion -- The Paradox of Policy and Rational Expectations -- Managing Expectations in the AS/AD Model -- Inflation Targeting -- 13.8.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 14.The Great Recession and the Short-Run Model -- 14.1.Introduction Note continued: 14.2.Financial Considerations in the Short-Run Model -- Financial Frictions -- Financial Frictions in the IS/MP Framework -- Financial Frictions in the AS/AD Framework -- The Dangers of Deflation -- 14.3.Policy Responses to the Financial Crisis -- The Taylor Rule and Monetary Policy -- The Money Supply -- The Fed's Balance Sheet -- The Troubled Asset Relief Program -- Fiscal Stimulus -- The European Debt Crisis -- Financial Reform -- 14.4.The Aftermath of the Great Recession -- Secular Stagnation -- A Productivity Slowdown? -- 14.5.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 15.DSGE Models: The Frontier of Business Cycle Research -- 15.1.Introduction -- 15.2.A Brief History of DSGE Models -- From Real Business Cycles to DSGE -- Endogenous Variables -- Shocks -- Features -- Mathematics and DSGE Models -- 15.3.A Stylized Approach to DSGE -- Labor Demand -- Labor Supply -- Equilibrium in the Labor Market Note continued: 15.4.Using the Stylized DSGE Model -- A Negative TFP Shock -- A Rise in Taxes Paid by Firms -- A Rise in Government Purchases -- Introducing Monetary Policy and Unemployment: Sticky Wages -- Monetary Policy and Sticky Prices -- Lessons from the Labor Market in DSGE Models -- 15.5.Quantitative DSGE Models -- Impulse Response Functions -- A Total Factor Productivity Shock -- A Shock to Government Purchases -- A Financial Friction Shock -- 15.6.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 15.7.Appendix: Deriving the Labor Supply Curve -- 16.Consumption -- 16.1.Introduction -- 16.2.The Neoclassical Consumption Model -- The Intertemporal Budget Constraint -- Utility -- Choosing Consumption to Maximize Utility -- Solving the Euler Equation: Log Utility -- Solving for ctoday and Cfuture: Log Utility and = 1 -- The Effect of a Rise in R on Consumption -- 16.3.Lessons from the Neoclassical Model Note continued: The Permanent-Income Hypothesis -- Ricardian Equivalence -- Borrowing Constraints -- Consumption as a Random Walk -- Precautionary Saving -- 16.4.Empirical Evidence on Consumption -- Evidence from Individual Households -- Aggregate Evidence -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 17.Investment -- 17.1.Introduction -- 17.2.How Do Firms Make Investment Decisions? -- Reasoning with an Arbitrage Equation -- The User Cost of Capital -- Example: Investment and the Corporate Income Tax -- From Desired Capital to Investment -- 17.3.The Stock Market and Financial Investment -- The Arbitrage Equation and the Price of a Stock -- P/E Ratios and Bubbles? -- Efficient Markets -- 17.4.Components of Private Investment -- Residential Investment -- Inventory Investment -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercises -- 18.The Government and the Macroeconomy -- 18.1.Introduction Note continued: 18.2.U.S. Government Spending and Revenue -- Spending and Revenue over Time -- The Debt-GDP Ratio -- 18.3.International Evidence on Spending and Debt -- 18.4.The Government Budget Constraint -- The Intertemporal Budget Constraint -- 18.5.How Much Can the Government Borrow? -- Economic Growth and the Debt-GDP Ratio -- High Inflation and Default -- Generational Accounting -- Deficits and Investment -- 18.6.The Fiscal Problem of the Twenty-First Century -- The Problem -- Possible Solutions -- 18.7.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 19.International Trade -- 19.1.Introduction -- 19.2.Some Basic Facts about Trade -- 19.3.A Basic Reason for Trade -- 19.4.Trade across Time -- 19.5.Trade with Production -- Autarky -- Free Trade -- Lessons from the Apple: Computer Example -- 19.6.Trade in Inputs -- Moving Capital versus Moving Labor -- 19.7.The Costs of Trade -- 19.8.The Trade Deficit and Foreign Debt Note continued: Trade and Growth around the World -- The Twin Deficits -- Net Foreign Assets and Foreign Debt -- 19.9.Conclusion -- Summary -- Key Concepts -- Review Questions -- Exercises -- Worked Exercise -- 20.Exchange Rates and International Finance -- 20.1.Introduction -- 20.2.Exchange Rates in the Long Run -- The Nominal Exchange Rate -- The Law of One Price -- The Real Exchange Rate -- Summary -- 20.3.Exchange Rates in the Short Run -- The Nominal Exchange Rate -- The Real Exchange Rate -- 20.4.Fixed Exchange Rates -- 20.5.The Open Economy in the Short-Run Model -- The New IS Curve -- Event #1: Tightening Domestic Monetary Policy and the IS Curve -- Event #2: A Change in Foreign Interest Rates -- 20.6.Exchange Rate Regimes -- 20.7.The Policy Trilemma -- Which Side of the Triangle to Choose? -- The Future of Exchange Rate Regimes -- 20.8.The Euro Crisis -- The Crisis of 2011-2013 -- Long-Term Competitiveness -- Summary -- Key Concepts -- Review Questions Note continued: Exercises -- Worked Exercises -- 21.Parting Thoughts -- 21.1.What We've Learned -- 21.2.Significant Remaining Questions -- 21.3.Conclusion.
Summary: The current economic crisis is the worst since the Great Depression. This book directly addresses the the global financial crisis and presents it in terms of the short-run models used in economics.
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Machine generated contents note: 1.Introduction to Macroeconomics --
1.1.What Is Macroeconomics? --
1.2.How Macroeconomics Studies Key Questions --
1.3.An Overview of the Book --
The Long Run --
The Short Run --
Issues for the Future --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
2.Measuring the Macroeconomy --
2.1.Introduction --
2.2.Measuring the State of the Economy --
Production = Expenditure = Income --
The Expenditure Approach to GDP --
The Income Approach to GDP --
The Production Approach to GDP --
What Is Included in GDP and What's Not? --
2.3.Measuring Changes over Time --
A Simple Example: Where Real GDP Doesn't Change --
A Second Example: Where Real GDP Changes --
Quantity Indexes: Laspeyres, Paasche, and Chain Weighting --
Price Indexes and Inflation --
Using Chain-Weighted Data --
2.4.Comparing Economic Performance across Countries --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise Note continued: 3.An Overview of Long-Run Economic Growth --
3.1.Introduction --
3.2.Growth over the Very Long Run --
3.3.Modern Economic Growth --
The Definition of Economic Growth --
A Population Growth Example --
The Rule of 70 and the Ratio Scale --
U.S. GDP on a Ratio Scale --
Calculating Growth Rates --
3.4.Modern Growth around the World --
A Broad Sample of Countries --
3.5.Some Useful Properties of Growth Rates --
3.6.The Costs of Economic Growth --
3.7.A Long-Run Roadmap --
3.8.Additional Resources --
Summary --
Growth Rules --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
4.A Model of Production --
4.1.Introduction --
4.2.A Model of Production --
Setting Up the Model --
Allocating Resources --
Solving the Model: General Equilibrium --
Interpreting the Solution --
4.3.Analyzing the Production Model --
Comparing Models with Data --
The Empirical Fit of the Production Model --
Productivity Differences: Improving the Fit of the Model Note continued: 4.4.Understanding TFP Differences --
Human Capital --
Technology --
Institutions --
Misallocation --
4.5.Evaluating the Production Model --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
5.The Solow Growth Model --
5.1.Introduction --
5.2.Setting Up the Model --
Production --
Capital Accumulation --
Labor --
Investment --
The Model Summarized --
5.3.Prices and the Real Interest Rate --
5.4.Solving the Solow Model --
Using the Solow Diagram --
Output and Consumption in the Solow Diagram --
Solving Mathematically for the Steady State --
5.5.Looking at Data through the Lens of the Solow Model --
The Capital-Output Ratio --
Differences in YIL --
5.6.Understanding the Steady State --
5.7.Economic Growth in the Solow Model --
Meanwhile, Back on the Family Farm --
5.8.Some Economic Experiments --
An Increase in the Investment Rate --
A Rise in the Depreciation Rate --
Experiments on Your Own Note continued: 5.9.The Principle of Transition Dynamics --
Understanding Differences in Growth Rates --
5.10.Strengths and Weaknesses of the Solow Model --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
6.Growth and Ideas --
6.1.Introduction --
6.2.The Economics of Ideas --
Ideas --
Nonrivalry --
Increasing Returns --
Problems with Pure Competition --
6.3.The Romer Model --
Solving the Romer Model --
Why Is There Growth in the Romer Model? --
Balanced Growth --
Experiments in the Romer Model --
Growth Effects versus Level Effects --
Recapping Romer --
6.4.Combining Solow and Romer: Overview --
6.5.Growth Accounting --
6.6.Concluding Our Study of Long-Run Growth --
6.7.A Postscript on Solow and Romer --
6.8.Additional Resources --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
6.9.Appendix: Combining Solow and Romer (Algebraically) --
Setting Up the Combined Model --
Solving the Combined Model Note continued: Long-Run Growth --
Output per Person --
Transition Dynamics --
More Exercises --
7.The Labor Market, Wages, and Unemployment --
7.1.Introduction --
7.2.The U.S. Labor Market --
The Dynamics of the Labor Market --
7.3.Supply and Demand --
A Change in Labor Supply --
A Change in Labor Demand --
Wage Rigidity --
Different Kinds of Unemployment --
7.4.The Bathtub Model of Unemployment --
7.5.Labor Markets around the World --
Hours of Work --
7.6.How Much Is Your Human Capital Worth? --
Present Discounted Value --
Your Human Capital --
7.7.The Rising Return to Education --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
8.Inflation --
8.1.Introduction --
8.2.The Quantity Theory of Money --
Measures of the Money Supply --
The Quantity Equation --
The Classical Dichotomy, Constant Velocity, and the Central Bank --
The Quantity Theory for the Price Level --
The Quantity Theory for Inflation --
Revisiting the Classical Dichotomy Note continued: 8.3.Real and Nominal Interest Rates --
8.4.Costs of Inflation --
8.5.The Fiscal Causes of High Inflation --
The Inflation Tax --
Central Bank Independence --
8.6.The Great Inflation of the 1970s --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
9.An Introduction to the Short Run --
9.1.Introduction --
9.2.The Long Run, the Short Run, and Shocks --
Trends and Fluctuations --
Short-Run Output in the United States --
Measuring Potential Output --
The Inflation Rate --
9.3.The Short-Run Model --
A Graph of the Short-Run Model --
How the Short-Run Model Works --
The Empirical Fit of the Phillips Curve --
Summary --
9.4.Okun's Law: Output and Unemployment --
9.5.Filling in the Details --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
10.The Great Recession: A First Look --
10.1.Introduction --
10.2.Recent Shocks to the Macroeconomy --
Housing Prices --
The Global Saving Glut Note continued: Subprime Lending and the Rise in Interest Rates --
The Financial Turmoil of 2007-2009 --
Oil Prices --
10.3.Macroeconomic Outcomes --
A Comparison to Previous Recessions --
Inflation --
The Rest of the World --
10.4.Some Fundamentals of Financial Economics --
Balance Sheets --
Leverage --
Bank Runs and Liquidity Crises --
Financial Wrap-Up --
10.5.Going Forward --
Summary --
Key Concepts --
Review Questions --
Exercises --
11.The IS Curve --
11.1.Introduction --
11.2.Setting Up the Economy --
Consumption and Friends --
The Investment Equation --
11.3.Deriving the IS Curve --
11.4.Using the IS Curve --
The Basic IS Curve --
The Effect of a Change in the Interest Rate --
An Aggregate Demand Shock --
A Shock to Potential Output --
Other Experiments --
11.5.Microfoundations of the IS Curve --
Consumption --
Multiplier Effects --
Investment --
Government Purchases --
Net Exports --
11.6.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises Note continued: Worked Exercises --
12.Monetary Policy and the Phillips Curve --
12.1.Introduction --
12.2.The MP Curve: Monetary Policy and Interest Rates --
From Nominal to Real Interest Rates --
The IS-MP Diagram --
Example: The End of a Housing Bubble --
12.3.The Phillips Curve --
Price Shocks and the Phillips Curve --
Cost-Push and Demand-Pull Inflation --
12.4.Using the Short-Run Model --
The Volcker Disinflation --
The Great Inflation of the 1970s --
The Short-Run Model in a Nutshell --
12.5.Microfoundations: Understanding Sticky Inflation --
The Classical Dichotomy in the Short Run --
12.6.Microfoundations: How Central Banks Control Nominal Interest Rates --
Changing the Interest Rate --
Why it instead of Mt? --
12.7.Inside the Federal Reserve --
Conventional Monetary Policy --
Open-Market Operations: How the Fed Controls the Money Supply --
12.8.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises Note continued: 13.Stabilization Policy and the AS/AD Framework --
13.1.Introduction --
13.2.Monetary Policy Rules and Aggregate Demand --
The AD Curve --
Moving along the AD Curve --
Shifts of the AD Curve --
13.3.The Aggregate Supply Curve --
13.4.The AS/AD Framework --
The Steady State --
The AS/AD Graph --
13.5.Macroeconomic Events in the AS/AD Framework --
Event #1: An Inflation Shock --
Event #2: Disinflation --
Event #3: A Positive AD Shock --
Further Thoughts on Aggregate Demand Shocks --
13.6.Empirical Evidence --
Predicting the Fed Funds Rate --
Inflation-Output Loops --
13.7.Modern Monetary Policy --
More Sophisticated Monetary Policy Rules --
Rules versus Discretion --
The Paradox of Policy and Rational Expectations --
Managing Expectations in the AS/AD Model --
Inflation Targeting --
13.8.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
14.The Great Recession and the Short-Run Model --
14.1.Introduction Note continued: 14.2.Financial Considerations in the Short-Run Model --
Financial Frictions --
Financial Frictions in the IS/MP Framework --
Financial Frictions in the AS/AD Framework --
The Dangers of Deflation --
14.3.Policy Responses to the Financial Crisis --
The Taylor Rule and Monetary Policy --
The Money Supply --
The Fed's Balance Sheet --
The Troubled Asset Relief Program --
Fiscal Stimulus --
The European Debt Crisis --
Financial Reform --
14.4.The Aftermath of the Great Recession --
Secular Stagnation --
A Productivity Slowdown? --
14.5.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
15.DSGE Models: The Frontier of Business Cycle Research --
15.1.Introduction --
15.2.A Brief History of DSGE Models --
From Real Business Cycles to DSGE --
Endogenous Variables --
Shocks --
Features --
Mathematics and DSGE Models --
15.3.A Stylized Approach to DSGE --
Labor Demand --
Labor Supply --
Equilibrium in the Labor Market Note continued: 15.4.Using the Stylized DSGE Model --
A Negative TFP Shock --
A Rise in Taxes Paid by Firms --
A Rise in Government Purchases --
Introducing Monetary Policy and Unemployment: Sticky Wages --
Monetary Policy and Sticky Prices --
Lessons from the Labor Market in DSGE Models --
15.5.Quantitative DSGE Models --
Impulse Response Functions --
A Total Factor Productivity Shock --
A Shock to Government Purchases --
A Financial Friction Shock --
15.6.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
15.7.Appendix: Deriving the Labor Supply Curve --
16.Consumption --
16.1.Introduction --
16.2.The Neoclassical Consumption Model --
The Intertemporal Budget Constraint --
Utility --
Choosing Consumption to Maximize Utility --
Solving the Euler Equation: Log Utility --
Solving for ctoday and Cfuture: Log Utility and = 1 --
The Effect of a Rise in R on Consumption --
16.3.Lessons from the Neoclassical Model Note continued: The Permanent-Income Hypothesis --
Ricardian Equivalence --
Borrowing Constraints --
Consumption as a Random Walk --
Precautionary Saving --
16.4.Empirical Evidence on Consumption --
Evidence from Individual Households --
Aggregate Evidence --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
17.Investment --
17.1.Introduction --
17.2.How Do Firms Make Investment Decisions? --
Reasoning with an Arbitrage Equation --
The User Cost of Capital --
Example: Investment and the Corporate Income Tax --
From Desired Capital to Investment --
17.3.The Stock Market and Financial Investment --
The Arbitrage Equation and the Price of a Stock --
P/E Ratios and Bubbles? --
Efficient Markets --
17.4.Components of Private Investment --
Residential Investment --
Inventory Investment --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercises --
18.The Government and the Macroeconomy --
18.1.Introduction Note continued: 18.2.U.S. Government Spending and Revenue --
Spending and Revenue over Time --
The Debt-GDP Ratio --
18.3.International Evidence on Spending and Debt --
18.4.The Government Budget Constraint --
The Intertemporal Budget Constraint --
18.5.How Much Can the Government Borrow? --
Economic Growth and the Debt-GDP Ratio --
High Inflation and Default --
Generational Accounting --
Deficits and Investment --
18.6.The Fiscal Problem of the Twenty-First Century --
The Problem --
Possible Solutions --
18.7.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
19.International Trade --
19.1.Introduction --
19.2.Some Basic Facts about Trade --
19.3.A Basic Reason for Trade --
19.4.Trade across Time --
19.5.Trade with Production --
Autarky --
Free Trade --
Lessons from the Apple: Computer Example --
19.6.Trade in Inputs --
Moving Capital versus Moving Labor --
19.7.The Costs of Trade --
19.8.The Trade Deficit and Foreign Debt Note continued: Trade and Growth around the World --
The Twin Deficits --
Net Foreign Assets and Foreign Debt --
19.9.Conclusion --
Summary --
Key Concepts --
Review Questions --
Exercises --
Worked Exercise --
20.Exchange Rates and International Finance --
20.1.Introduction --
20.2.Exchange Rates in the Long Run --
The Nominal Exchange Rate --
The Law of One Price --
The Real Exchange Rate --
Summary --
20.3.Exchange Rates in the Short Run --
The Nominal Exchange Rate --
The Real Exchange Rate --
20.4.Fixed Exchange Rates --
20.5.The Open Economy in the Short-Run Model --
The New IS Curve --
Event #1: Tightening Domestic Monetary Policy and the IS Curve --
Event #2: A Change in Foreign Interest Rates --
20.6.Exchange Rate Regimes --
20.7.The Policy Trilemma --
Which Side of the Triangle to Choose? --
The Future of Exchange Rate Regimes --
20.8.The Euro Crisis --
The Crisis of 2011-2013 --
Long-Term Competitiveness --
Summary --
Key Concepts --
Review Questions Note continued: Exercises --
Worked Exercises --
21.Parting Thoughts --
21.1.What We've Learned --
21.2.Significant Remaining Questions --
21.3.Conclusion.

The current economic crisis is the worst since the Great Depression. This book directly addresses the the global financial crisis and presents it in terms of the short-run models used in economics.

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