| Formatted contents note |
Contents<br/>Preface<br/>Introduction 1<br/>Chapter 1 A Tour of the World 3<br/>1-1 The United States 4<br/>Has the United States Entered a New Economy? 5<br/>Should You Worry about the U.S. Budget Deficit? 7<br/>1-2 The European Union 8<br/>How Can European Unemployment Be Reduced? 10<br/>What Will the Euro Do for Europe? 11<br/>1-3 Japan 12<br/>What Triggered the Slump? 13<br/>How Will Japan Recover? 15<br/>1-4 Looking Ahead 15<br/>Appendix: Where to Find the Numbers? 19<br/>Chapter 2 A Tour of the Book 21<br/>2-1 Aggregate Output 22<br/>GDP: Production and Income 22<br/>Nominal and Real GDP 24<br/>2-2 The Other Major Macroeconomic Variables 28<br/>The Unemployment Rate 28<br/>The Inflation Rate 31<br/>2-3 The Short Run, the Medium Run, the Long Run 34<br/>2-4 A Tour of the Book 35<br/>The Core 35<br/>Extensions 36<br/>Back to Policy 36<br/>Epilogue 37<br/>Appendix: The Construction of Real GDP and Chain-Type Indexes<br/> 40<br/>The Core 43<br/>The Short Run 43<br/>Chapter 3 The Goods Market 45<br/>3-1 The Composition of GDP 46<br/>3-2 The Demand for Goods 48<br/>Consumption (C) 48<br/>Investment (I) 50<br/>Government Spending (G) 50<br/>3-3 The Determination of Equilibrium Output 50<br/>Using Algebra 51<br/>Using a Graph 52<br/>Using Words 55<br/>How Long Does It Take for Output to Adjust? 55<br/>3-4 Investment Equals Saving: An Alternative Way of Thinking <br/>about Goods-Market Equilibrium 58<br/>3-5 Is the Government Omnipotent? A Warning 60<br/>Chapter 4 Financial Markets 65<br/>4-1 The Demand for Money 66<br/>Deriving the Demand for Money 68<br/>4-2 The Determination of the Interest Rate. I 69<br/>Money Demand, Money Supply, and the Equilibrium Interest Rate<br/> 69<br/>Monetary Policy and Open Market Operations 73<br/>Open Market Operations 74<br/>Choosing Money or Choosing the Interest Rate? 75<br/>Money, Bonds, and Other Assets 76<br/>4-3 The Determination of Interest Rate. II* 76<br/>What Banks Do 76<br/>The Supply and the Demand for Central Bank Money 77<br/>4-4 Two Alternative Ways of Looking at the Equilibrium* 82<br/>The Federal Funds Market and the Federal Funds Rate 82<br/>The Supply of Money, the Demand for Money, and the Money <br/>Multiplier 83<br/>Chapter 5 Goods and Financial Markets: The IS-LM Model 89<br/>5-1 The Goods Market and the IS Relation 90<br/>Investment, Sales, and the Interest Rate 90<br/>Determining Output 91<br/>Deriving the IS Curve 92<br/>Shifts of the IS Curve 94<br/>5-2 Financial Markets and the LM Relation 94<br/>Real Money, Real Income, and the Interest Rate 95<br/>Deriving the LM Curve 95<br/>Shifts of the LM Curve 97<br/>5-3 Putting the IS and the LM Relations Together 98<br/>Fiscal Policy, Activity, and the Interest Rate 99<br/>Monetary Policy, Activity, and the Interest Rate 101<br/>5-4 Using a Policy Mix 103<br/>5-5 How Does the IS-LM Model Fit the Facts? 107<br/>The Medium Run 115<br/>Chapter 6 The Labor Market 117<br/>6-1 A Tour of the Labor Market 118<br/>The Large Flows of Workers 118<br/>6-2 Movements in Unemployment 120<br/>6-3 Wage Determination 124<br/>Bargaining 125<br/>Efficiency Wages 125<br/>Wages, Prices, and Unemployment 126<br/>6-4 Price Determination 128<br/>6-5 The Natural Rate of Unemployment 129<br/>The Wage-Setting Relation 129<br/>The Price-Setting Relation 129<br/>Equilibrium Real Wages and Unemployment 130<br/>From Unemployment to Employment 132<br/>From Employment to Output 132<br/>6-6 Where We Go From Here 133<br/>Appendix: Wage- and Price-Setting Relations versus Labor Supply <br/>and Labor Demand 137<br/>Chapter 7 Putting All Markets Together: The AS-AD Model 139<br/>7-1 Aggregate Supply 140<br/>7-2 Aggregate Demand 142<br/>7-3 Equilibrium in the Short Run and in the Medium Run 145<br/>Equilibrium in the Short Run 145<br/>From the Short Run to the Medium Run 146<br/>7-4 The Effects of a Monetary Expansion 148<br/>The Dynamics of Adjustment 148<br/>Going Behind the Scenes 149<br/>The Neutrality of Money 151<br/>7-5 A Decrease in the Budget Deficit 151<br/>Deficit Reduction, Output, and the Interest Rate 153<br/>Budget Deficits, Output, and Investment 154<br/>7-6 Changes in the Price of Oil 155<br/>Effects on the Natural Rate of Unemployment 156<br/>The Dynamics of Adjustment 157<br/>7-7 Conclusions 159<br/>The Short Run versus the Medium Run 159<br/>Shocks and Propagation Mechanisms 160<br/>Where We Go From Here: Output, Unemployment, and Inflation 160<br/>Chapter 8 The Natural Rate of Unemployment and the Phillips Curve<br/> 165<br/>8-1 Inflation, Expected Inflation, and Unemployment 166<br/>8-2 The Phillips Curve 167<br/>The Early Incarnation 167<br/>Mutations 168<br/>Back to the Natural Rate of Unemployment 172<br/>8-3 A Summary and Many Warnings 173<br/>Variations in the Natural Rate Across Countries 174<br/>Variations in the Natural Rate Over Time 176<br/>High Inflation and the Phillips Curve Relation 176<br/>Deflation and the Phillips Curve Relation 180<br/>Appendix: From the Aggregate Supply Relation to a Relation <br/>Between Inflation, Expected Inflation, and Unemployment 183<br/>Chapter 9 Inflation, Activity, and Nominal Money Growth 185<br/>9-1 Output, Unemployment, and Inflation 186<br/>Okun's Law 186<br/>The Phillips Curve 188<br/>The Aggregate Demand Relation 188<br/>9-2 The Effects of Money Growth 190<br/>The Medium Run 191<br/>The Short Run 192<br/>9-3 Disinflation 193<br/>A First Pass 193 <br/>Expectations and Credibility: The Lucas Critique 195<br/>Nominal Rigidities and Contracts 196<br/>The Long Run<br/>Chapter 10 The Facts of Growth<br/>10-1 Growth in Rich Countries Since 1950<br/>The Large Increase in the Standard of Living Since 1950<br/>The Decrease in Growth Rates Since the Mid-1970s<br/>The Convergence of Output per Capita<br/>10-2 A Broader Look Across Time and Space<br/>Looking Across Two Millennia<br/>Looking Across Countries<br/>10-3 Thinking About Growth: A Primer<br/>The Aggregate Production Function<br/>Returns to Scale and Returns to Factors<br/>Output per Worker and Capital per Worker<br/>The Sources of Growth<br/>Chapter 11 Saving, Capital Accumulation, and Output<br/>11-1 Interactions Between Output and Capital<br/>The Effects of Capital on Output<br/>The Effects of Output on Capital Accumulation<br/>11-2 The Implications of Alternative Saving Rates<br/>Dynamics of Capital and Output<br/>Steady-State Capital and Output<br/>The Saving Rate and Output<br/>The Saving Rate and Consumption<br/>11-3 Getting a Sense of Magnitudes<br/>The Effects of the Saving Rate on Steady-State Output<br/>The Dynamic Effects of an Increase in the Saving Rate<br/>The U.S. Saving Rate and the Golden Rule<br/>11-4 Physical Versus Human Capital<br/>Extending the Production Function<br/>Human Capital, Physical Capital, and Output<br/>Endogenous Growth<br/>Appendix: The Cobb-Douglas Production Function and the Steady <br/>State<br/>Chapter 12 Technological Progress and Growth<br/>12-1 Technological Progress and the Rate of Growth<br/>Technological Progress and the Production Function<br/>Interactions Between Output and Capital<br/>Dynamics of Capital and Output<br/>The Effects of the Saving Rate<br/>12-2 The Determinants of Technological Progress<br/>The Fertility of the Research Process<br/>The Appropriability of Research Results<br/>12-3 The Facts of Growth Revisited<br/>Capital Accumulation Versus Technological Progress<br/>Fluctuations in the Pace of Technological Progress<br/>12-4 Institutions and Growth<br/>Appendix: Constructing a Measure of Technological Progress<br/>Chapter 13 Technological Progress, Wages, and Unemployment<br/>13-1 Productivity, Output, and Unemployment in the Short Run<br/>Technological Progress, Aggregate Supply, and Aggregate Demand<br/>The Empirical Evidence<br/>13-2 Productivity and the Natural Rate of Unemployment<br/>Price Setting and Wage Setting Revisited<br/>The Natural Rate of Unemployment<br/>The Empirical Evidence<br/>13-3 Technological Progress and Distribution Effects<br/>The Increase in Wage Inequality<br/>The Causes of Increased Wage Inequality<br/>Extensions<br/>Expectations<br/>Chapter 14 Expectations: The Basic Tools<br/>14-1 Nominal Versus Real Interest Rates<br/>Nominal and Real Interest Rates in the United States Since 1978<br/>14-2 Expected Present Discounted Values<br/>Computing Expected Present Discounted Values<br/>Using Present Values: Examples<br/>Nominal Versus Real Interest Rates, and Present Values<br/>14-3 Nominal and Real Interest Rates, and the IS-LM Model<br/>14-4 Money Growth, Inflation, Nominal and Real Interest Rates<br/>Revisiting the IS-LM Model<br/>Nominal and Real Interest Rates in the Short Run<br/>Nominal and Real Interest Rates in the Medium Run<br/>From the Short to the Medium Run<br/>Evidence on the Fisher Hypothesis<br/>Appendix: Deriving the Expected Present Discounted Value Using <br/>Real or Nominal Interest Rates<br/>Chapter 15 Financial Markets and Expectations<br/>15-1 Bond Prices and Bond Yields<br/>Bond Prices as Present Values<br/>Arbitrage and Bond Prices<br/>From Bond Prices to Bond Yields<br/>Interpreting the Yield Curve<br/>The Yield Curve and Economic Activity<br/>15-2 The Stock Market and Movements in Stock Prices<br/>Stock Prices as Present Values<br/>The Stock Market and Economic Activity<br/>15-3 Bubbles, Fads, and Stock Prices<br/>Appendix: Arbitrage and Stock Prices<br/>Chapter 16 Expectations, Consumption, and Investment<br/>16-1 Consumption<br/>The Very Foresighted Consumer<br/>An Example<br/>Toward a More Realistic Description<br/>Putting Things Together: Current Income, Expectations, and <br/> Consumption<br/>16-2 Investment<br/>Investment and Expectations of Profit<br/>A Convenient Special Case<br/>Current Versus Expected Profit<br/>Profit and Sales<br/>16-3 The Volatility of Consumption and Investment<br/>Appendix: Derivation of the Expected Present Value of Profits Under <br/>Static Expectations<br/>Chapter 17 Expectations, Output, and Policy<br/>17-1 Expectations and Decisions: Taking Stock<br/>Expectations, Consumption, and Investment Decisions<br/>Expectations and the IS Relation<br/>The LM Relation Revisited<br/>17-2 Monetary Policy, Expectations, and Output<br/>Monetary Policy Revisited<br/>17-3 Deficit Reduction, Expectations, and Output<br/>The Role of Expectations About the Future<br/>Back to the Current Period<br/>The Open Economy<br/>Chapter 18 Openness in Goods and Financial Markets<br/>18-1 Openness in Goods Markets<br/>Exports and Imports<br/>The Choice Between Domestic Goods and Foreign Goods<br/>Nominal Exchange Rates<br/>From Nominal to Real Exchange Rates<br/>From Bilateral to Multilateral Exchange Rates<br/>18-2 Openness in Financial Markets<br/>The Balance of Payments<br/>The Choice Between Domestic and Foreign Assets<br/>Interest Rates and Exchange Rates<br/>18-3 Conclusions and a Look Ahead<br/>Chapter 19 The Goods Market in an Open Economy<br/>19-1 The IS Relation in the Open Economy<br/>The Demand for Domestic Goods<br/>19-2 Equilibrium Output and the Trade Balance<br/>19-3 Increases in Demand, Domestic or Foreign<br/>Increases in Domestic Demand<br/>Increases in Foreign Demand<br/>Fiscal Policy Revisited<br/>19-4 Depreciation, the Trade Balance, and Output<br/>Depreciation and the Trade Balance: The Marshall-Lerner Condition<br/>The Effects of a Depreciation<br/>Combining Exchange-Rate and Fiscal Policies<br/>19-5 Looking at Dynamics: The J-Curve<br/>19-6 Saving, Investment, and the Trade Balance<br/>Appendix 1: Multipliers: Belgium Versus the United States<br/>Appendix 2: Derivation of the Marshall-Lerner Condition<br/>Chapter 20 Output, the Interest Rate, and the Exchange Rate<br/>20-1 Equilibrium in the Goods Market<br/>20-2 Equilibrium in Financial Markets<br/>Money Versus Bonds<br/>Domestic Bonds Versus Foreign Bonds<br/>20-3 Putting Goods and Financial Markets Together<br/>20-4 The Effects of Policy in an Open Economy<br/>The Effects of Fiscal Policy in an Open Economy<br/>The Effects of Monetary Policy in an Open Economy<br/>20-5 Fixed Exchange Rates<br/>Pegs, Crawling Pegs, Bands, the EMS, and the Euro<br/>Pegging the Exchange Rate, and Monetary Control<br/>Fiscal Policy Under Fixed Exchange Rates<br/>Appendix: Fixed Exchange Rates, Interest Rates, and Capital <br/>Mobility<br/>Chapter 21 Exchange Rate Regimes<br/>21-1 The Medium Run<br/>Aggregate Demand Under Fixed Exchange Rates<br/>Equilibrium in the Short Run and in the Medium Run<br/>The Case for and Against a Devaluation<br/>21-2 Exchange Rate Crises Under Fixed Exchange Rates<br/>21-3 Exchange Rate Movements under Flexible Exchange Rates<br/>Exchange Rates and the Current Account<br/>Exchange Rates, and Current and Future Interest Rates<br/>Exchange Rate Volatility<br/>21-4 Choosing Between Exchange Rate Regimes<br/>Common Currency Areas<br/>Hard Pegs, Currency Boards, and Dollarization<br/>Appendix 1: The Real Exchange Rate, and Domestic and Foreign Real <br/>Interest Rates<br/>Appendix 2: Deriving Aggregate Demand Under Fixed Exchange <br/>Rates<br/>Pathologies<br/>Chapter 22 Depressions and Slumps<br/>22-1 Disinflation, Deflation, and the Liquidity Trap<br/>The Nominal Interest Rate, the Real Interest Rate, and Expected Inflation<br/>The Liquidity Trap<br/>Putting Things Together: The Liquidity Trap and Deflation<br/>22-2 The Great Depression<br/>The Initial Fall in Spending<br/>The Contraction in Nominal Money<br/>The Adverse Effects of Deflation<br/>The Recovery<br/>22-3 The Japanese Slump<br/>The Rise and Fall of the Nikkei<br/>The Failure of Monetary and Fiscal Policy<br/>The Recovery<br/>Chapter 23 High Inflation<br/>23-1 Budget Deficits and Money Creation<br/>23-2 Inflation and Real Money Balances<br/>23-3 Deficits, Seignorage, and Inflation<br/>The Case of Constant Nominal Money Growth<br/>Dynamics and Increasing Inflation<br/>Hyperinflation and Economic Activity<br/>23-4 How Do Hyperinflations End?<br/>The Elements of a Stabilization Program<br/>Can Stabilization Programs Fail?<br/>The Costs of Stabilization<br/>23-5 Conclusions<br/>Back to Policy<br/>Chapter 24 Should Policy Makers Be Restrained?<br/>24-1 Uncertainty and Policy<br/>How Much Do Macroeconomists Actually Know?<br/>Should Uncertainty Lead Policy Makers to Do Less?<br/>Uncertainty and Restraints on Policy Makers<br/>24-2 Expectations and Policy<br/>Hostage Takings and Negotiations<br/>Inflation and Unemployment Revisited<br/>Establishing Credibility<br/>Time Consistency and Restraints on Policy Makers<br/>24-3 Politics and Policy<br/>Games Between Policy Makers and Voters<br/>Games Between Policy Makers<br/>Politics and Fiscal Restraints<br/>Chapter 25 Monetary Policy: A Summing Up<br/>25-1 The Optimal Inflation Rate<br/>The Costs of Inflation<br/>The Benefits of Inflation<br/>The Optimal Inflation Rate: The Current Debate<br/>25-2 The Design of Monetary Policy<br/>Money Growth Targets and Target Ranges<br/>Money Growth and Inflation Revisited<br/>Inflation Targeting<br/>Interest Rate Rules<br/>25-3 The Fed in Action<br/>The Mandate of the Fed<br/>The Organization of the Fed<br/>The Instruments of Monetary Policy<br/>The Implementation of Policy<br/>Chapter 26 Fiscal Policy: A Summing Up<br/>26-1 The Government Budget Constraint<br/>The Arithmetic of Deficits and Debt<br/>Current Versus Future Taxes<br/>The Evolution of the Debt-to-GDP Ratio<br/>26-2 Four Issues in Fiscal Policy<br/>Ricardian Equivalence<br/>Deficits, Output Stabilization, and the Cyclically Adjusted Deficit<br/>Wars and Deficits<br/>The Dangers of Very High Debt<br/>26-3 The U.S. Budget: Current Numbers and Future Prospects<br/>Current Numbers<br/>Medium-Run Budget Projections<br/>The Long-Run Challenges: Low Saving, Aging, and Medical Care<br/>Epilogue<br/>Chapter 27 Epilogue: The Story of Macroeconomics<br/>27-1 Keynes and the Great Depression<br/>27-2 The Neoclassical Synthesis<br/>Progress on All Fronts<br/>Keynesians Versus Monetarists<br/>27-3 The Rational Expectations Critique<br/>The Three Implications of Rational Expectations<br/>The Integration of Rational Expectations<br/>27-4 Current Developments<br/>New Classical Economics and Real Business Cycle Theory<br/>New Keynesian Economics<br/>New Growth Theory<br/>27-5 Common Beliefs<br/>Appendix 1 An Introduction to National Income and Product Accounts<br/>Appendix 2 A Math Refresher<br/>Appendix 3 An Introduction to Econometrics<br/>Glossary<br/>Index<br/> |
