Macro economics /
Charles I. Jones, Stanford University, Graduate School of Business.
- 4th edition. Int. student ed.
- New York, NY : W. W. Norton & Company, Inc., 2018.
- xxiii, 616 pages ; 27 cm
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.