9780262024365

Macroeconomics - 5th Edition

by
  • ISBN13:

    9780262024365

  • ISBN10:

    0262024365

  • Edition: 5th
  • Format: Hardcover
  • Copyright: 1997-10-08
  • Publisher: Mit Pr

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Summary

Robert Barro's Macroeconomics has become the classic textbook presentation of the equilibrium approach to macroeconomics. In its first four editions, this book has shown undergraduates how market-clearing models with strong microeconomic foundations can be used to understand real-world phenomena and to evaluate alternative macroeconomic policies. Moreover, a single, unified framework works as well for short-term business fluctuation as for long-term economic growth. This latest edition includes the most recent theoretical and empirical developments in economic growth, recent evidence on the macroeconomics of labor markets and public finance, and up-to-date results on the interplay between nominal and real variables.

Table of Contents

PREFACE XXIII
CHAPTER 1 THE APPROACH TO MACROECONOMICS
1(56)
The Behavior of Output, Unemployment, and the Price Level in the United States
2(6)
Some Key Facts about U.S. Business Fluctuations
8(14)
The Components of GDP
10(7)
Labor Input and Productivity
17(4)
The Price Level
21(1)
The Approach to Macroeconomics
22(10)
Microeconomics Foundations of Macroeconomics
23(3)
Market-Clearing Conditions
26(2)
Using the Market-Clearing Model
28(4)
A Note on Mathematics and Economic Reasoning
32(1)
Elements of National-Income Accounting
33(17)
Nominal and Real GDP
33(4)
The Gross Domestic Product-Expenditure, Production, and Income
37(10)
Prices
47(1)
Problems with the Consumer Price Index
48(2)
Important Terms and Concepts
50(7)
PART ONE MICROECONOMIC FOUNDATIONS AND THE BASIC MARKET-CLEARING MODEL 57(178)
CHAPTER 2 WORK EFFORT, PRODUCTION, AND CONSUMPTION--THE ECONOMICS OF ROBINSON CRUSOE
59(32)
Production Technology
60(4)
Tastes for Consumption and Leisure
64(6)
Deciding How Much to Work
70(2)
Shifts in the Production Function
72(1)
Wealth Effects
73(4)
Substitution Effects for Work versus Consumption
77(3)
Combining the Wealth and Substitution Effects
80(3)
Summary
83(1)
Important Terms and Concepts
84(1)
Questions and Problems
85(6)
CHAPTER 3 THE BEHAVIOR OF HOUSEHOLDS WITH MARKETS FOR COMMODITIES AND CREDIT
91(42)
The Commodity Market
92(2)
Money
92(1)
The Price Level
93(1)
The Credit Market
94(2)
Budget Constraints
96(8)
Budget Constraints for One Period
96(2)
Budget Constraints for Two Periods
98(2)
Present Values
100(1)
The Household's Budget Line
101(3)
Preferences for Consuming Now versus Later
104(1)
Choosing Consumption over Two Periods
104(3)
Wealth and Substitution Effects
107(4)
Wealth Effects on Consumption
107(1)
The Interest Rate and Intertemporal Substitution
108(2)
Empirical Evidence on Intertemporal Substitution of Consumption
110(1)
Choosing Work Effort at Different Dates
111(2)
Wealth Effects on Work Effort
111(1)
The Interest Rate and Choices of Work Effort
112(1)
Empirical Evidence on Intertemporal Substitution of Work Effort
113(1)
Budget Constraints over Many Periods
113(4)
Budget Constraints for Any Number of Periods
114(1)
The Household's Planning Horizon
115(1)
Budget Constraints for an Infinite Horizon
116(1)
Choices over Many Periods
117(6)
The Interest Rate and Intertemporal Substitution
118(1)
Wealth Effects
118(3)
Empirical Evidence on the Marginal Propensity to Consume
121(2)
Shifts in the Schedule for Labor's Marginal Product
123(1)
Summary
124(1)
Important Terms and Concepts
125(2)
Questions and Problems
127(6)
CHAPTER 4 THE DEMAND FOR MONEY
133(34)
The Nature of a Monetary Economy
134(3)
A Model of Optimal Cash Management
137(8)
Properties of the Demand for Money
143(1)
The Aggregate Demand for Money
144(1)
Generalizations and Implications for Money Demand
145(3)
The Payments Period and the Demand for Money
147(1)
The Velocity of Money
148(3)
The Velocity of Money in the United States
148(3)
Empirical Evidence on the Demand for Money
151(3)
Money and Household's Budget Constraints
154(5)
The Real-Balance Effect
156(1)
Transaction Costs and other Real Effects of Money
157(2)
Summary
159(1)
Important Terms and Concepts
160(1)
Questions and Problems
161(6)
CHAPTER 5 THE BASIC MARKET-CLEARING MODEL
167(40)
Aggregate-Consistency Conditions and the Clearing of Markets
168(4)
Walras' Law of Markets
170(2)
Clearing the Commodity Market
172(5)
Why Does the Price Level Not Affect Commodities Supplied and Demanded?
175(2)
The Quantity of Money Equals the Quantity Demanded
177(1)
General Market Clearing
178(1)
Supply Shocks
179(14)
A Temporary Shift of the Production Function
180(10)
Supply Shocks and the Interest Rate in Nineteenth-Century France
190(1)
A Permanent Shift of the Production Function
190(3)
Changes in the Stock of Money
193(4)
The Neutrality of Money
195(1)
The Quantity Theory of Money and Monetarism
195(2)
Changes in the Demand for Money
197(1)
Summary
198(1)
Important Terms and Concepts
199(1)
Questions and Problems
200(7)
CHAPTER 6 THE LABOR MARKET
207(28)
Setup of the Labor Market
208(1)
The Demand for Labor
209(4)
The Gains from Equalizing Labor's Marginal Product across Firms
211(1)
Properties of the Demand for Labor
212(1)
Labor Supply and Consumption Demand
213(1)
Clearing of the Labor Market
214(5)
Empirical Evidence on the Response of Labor Supply to Time Variations in Real Wage Rates
215(4)
Clearing of the Commodity Market
219(4)
An Improvement in the Production Function
221(2)
The Behavior of the Real Wage Rate
223(4)
Nominal Wage Rates
227(1)
The Labor Market in the Macroeconomic Model
228(1)
Summary
229(1)
Important Terms and Concepts
230(1)
Questions and Problems
231(4)
PART TWO INFLATION 235(72)
CHAPTER 7 AN INTRODUCTION TO INFLATION AND INTEREST RATES
237(32)
Cross-Country Data on Inflation and Monetary Growth
238(8)
U.S. Time-Series Data on Inflation and Monetary Growth
246(2)
Inflation as a Monetory Phenomenon
247(1)
Actual and Expected Inflation
248(1)
Real and Nominal Interest Rates
249(14)
Actual and Expected Real Interest Rates
251(2)
Nominal and Real Interest Rates in the Post-World War II United States
253(4)
Interest Rates and Expected Inflation in the Post-World War II Period
257(2)
Interest Rates on Money
259(1)
Indexed Bonds in the United Kingdom
260(3)
Summary
263(1)
Important Terms and Concepts
263(1)
Questions and Problems
264(5)
CHAPTER 8 MONEY, INFLATION, AND INTEREST RATES IN THE MARKET-CLEARING MODEL
269(38)
Incorporation of Inflation and Monetary Growth into the Model
270(5)
Monetary Growth and Transfer Payments
270(2)
Budget Constraints over an Infinite Horizon
272(2)
Intertemporal-Substitution Effects
274(1)
Interest Rates and the Demand for Money
275(1)
Market-Clearing Conditions
275(1)
The Superneutrality of Money
276(1)
Monetary Growth, Inflation, and the Nominal Interest Rate
277(9)
A Shift in the Monetary Growth Rate
280(6)
The Dynamics of Inflation
286(8)
Gradual Adjustment of the Demand for Money
287(1)
Anticipated Changes in Monetary Growth
287(3)
The Transition from One Inflation Rate to Another
290(1)
Money and Prices during the German Hyperinflation
290(4)
Real Effects of Inflation
294(3)
Some Effects from Unanticipated Inflation
294(1)
Effects of Anticipated Inflation on Real Money Balances and Transaction Costs
294(1)
The Revenue from Money Creation
295(2)
Summary
297(1)
Appendix (optional): The Wealth Effects from the Monetary Terms
298(2)
Important Terms and Concepts
300(1)
Questions and Problems
301(6)
PART THREE BUSINESS FLUCTUATIONS, UNEMPLOYMENT, AND ECONOMIC GROWTH 307(126)
CHAPTER 9 INVESTMENT AND REAL BUSINESS CYCLES
309(42)
The Capital Stock and Investment in the United States
310(4)
Real GDP and Its Components during Recessions
314(2)
Capital in the Production Function
316(2)
Investment Goods and Consumer Goods
318(1)
Depreciation
319(1)
Characteristics of Existing Capital
320(1)
Investment Demand
321(7)
Properties of Investment Demand
324(2)
Absence of a Resale Market (optional)
326(1)
Gradual Adjustment of Investment Demand
327(1)
Investment and Households' Budget Constraints
328(3)
Clearing of the Commodity Market
331(2)
Real Business Cycles
333(11)
A Temporary Shift of the Production Function
333(6)
A Permanent Shift of the Production Function
339(2)
Shifts to the Productivity of Capital
341(3)
Summary
344(2)
Important Terms and Concepts
346(1)
Questions and Problems
347(4)
CHAPTER 10 UNEMPLOYMENT
351(38)
A Model of Job Finding
353(4)
Search by Firms
356(1)
Job Separations
357(1)
Job Separations, Job Finding, and the Natural Unemployment Rate
358(7)
Movements in and out of the Labor Force
362(3)
The Behavior of U.S. Unemployment Rates
365(18)
Causes for the Demographic Variations in Unemployment Rates
367(3)
Determinats of the Natural Unemployment Rate
370(7)
Employment and Unemployment during Recessions
377(2)
Supply Shocks, Recessions, and Unemployment
379(4)
Summary
383(1)
Important Terms and Concepts
384(2)
Questions and Problems
386(3)
CHAPTER 11 ECONOMIC GROWTH
389(44)
Changes in the Stock of Capital
390(7)
How Long Is the Transition Interval?
396(1)
Convergence
397(1)
Population Growth
398(1)
Technological Progress
399(4)
The Behavior of the Saving Rate
402(1)
Evidence from U.S. History
403(3)
Evidence on Convergence from the U.S. States and Regions of Western Europe
406(6)
Evidence on Convergence across Countries
412(6)
Recent Theories of Economic Growth (optional)
418(3)
Theories of Technological Progress
419(1)
Population Growth
420(1)
Constant-Returns Models
420(1)
Summary
421(2)
Important Terms and Concepts
423(1)
Questions and Problems
424(9)
PART FOUR GOVERNMENT BEHAVIOR 433(116)
CHAPTER 12 GOVERNMENT CONSUMPTION AND PUBLIC SERVICES
435(36)
Data on Government Expenditures
435(5)
The Government's Budget Constraint
440(3)
Public Production
441(1)
Public Services
442(1)
Households' Budget Constraints
443(1)
Temporary Changes in Government Consumption
444(2)
Clearing of the Commodity Market
446(4)
Evidence from Wartime Experiences
450(9)
The Behavior of Output and Other Quantities
450(4)
The Behavior of Real Interest Rates
454(5)
Permanent Changes in Government Consumption
459(3)
Results When Public Services Are Useful and When Labor Supply Varies (optional)
461(1)
Summary
462(1)
Important Terms and Concepts
463(1)
Questions and Problems
464(7)
CHAPTER 13 TAXES AND TRANSFERS
471(38)
Sources of Government Revenues in the United States
472(4)
Types of Taxes
476(5)
Federal Individual Income Tax
477(2)
State and Local Income Taxes
479(1)
Social Security Tax
480(1)
Corporate Profits Taxes
480(1)
Property Taxes
481(1)
Sales and Excise Taxes
481(1)
An Income Tax in the Theoretical Model
481(5)
Households' Budget Constraints
483(1)
Tax Rates and Substitution Effects
484(2)
A Change in the Tax Rate
486(12)
Clearing of the Commodity Market
487(1)
Effects of a Higher Tax Rate
488(2)
Long-Run Effects of a Higher Tax Rate
490(1)
The Wealth Effect from a Change in the Tax Rate (optional)
491(1)
Effects of a Permanent Rise in Government Consumption under Income Taxation
492(1)
The Relation between the Tax Rate and Tax Revenues
493(5)
Transfer Payments
498(2)
The Earned-Income Tax Credit
499(1)
Summary
500(2)
Important Terms and Concepts
502(1)
Questions and Problems
503(6)
CHAPTER 14 THE PUBLIC DEBT
509(40)
The Behavior of the Public Debt in the United States and the United Kingdom
510(5)
Characteristics of Government Bonds
515(1)
The Government's Budget Constraint
516(5)
The Government's Deficit
517(3)
Public Saving, Private Saving, and National Saving
520(1)
Public Debt and Household's Budget Constraints
521(4)
The Effect of a Deficit-Financed Tax Cut
525(2)
Open-Market Operations
527(1)
Why Does the Public Debt Matter?
528(4)
The Timing of Taxes
532(2)
"Unpleasant Monetarist Arithmetic"
533(1)
The Conventional View of a Deficit-Financed Tax Cut
534(6)
The Effect of a Tax Cut on Wealth
535(3)
Empirical Evidence on the Macroeconomic Effects of Budget Deficits
538(2)
Social Security and Saving
540(2)
Summary
542(1)
Important Terms and Concepts
543(2)
Questions and Problems
545(4)
PART FIVE THE INTERNATIONAL ECONOMY 549(92)
CHAPTER 15 WORLD MARKETS IN GOODS AND CREDIT
553(42)
The United States as an Open Economy
554(10)
The Role of the International Credit Market
564(11)
Second-Round Effects from Changes in Net Foreign Assets
569(1)
Examples of International Borrowing and Lending
569(3)
The Cyclical Behavior of the Current Account
572(3)
Fiscal Policy in the World Economy
575(7)
Government Consumption
575(2)
Tax Rates
577(1)
Budget Deficits
578(4)
The Terms of Trade
582(5)
Nontraded Goods
586(1)
Summary
587(2)
Important Terms and Concepts
589(1)
Questions and Problems
590(5)
CHAPTER 16 EXCHANGE RATES
595(46)
Different Monies and Exchange Rates
596(4)
Purchasing-Power Parity
600(4)
Purchasing-Power Parity in Terms of the Big Mac
602(2)
Interest-Rate Parity
604(3)
Fixed Exchange Rates
607(10)
The Quantity of Money under Fixed Exchange Rates
610(4)
World Prices under Fixed Exchange Rates
614(1)
Devaluation
615(2)
Flexible Exchange Rates
617(4)
Purchasing-Power Parity under Flexible and Fixed Exchange Rates
621(8)
Exchange Rates and the Current-Account Balance
629(2)
Summary
631(2)
Important Terms and Concepts
633(2)
Questions and Problems
635(6)
PART SIX INTERACTIONS BETWEEN THE MONETARY SECTOR AND THE REAL SECTOR 641(167)
CHAPTER 17 FINANCIAL INTERMEDIATION
645(46)
Checkable Deposits and M1
645(3)
Indexes of Money
647(1)
Financial Intermediaries and the Credit Market
648(11)
The Balance Sheet of a Financial Intermediary
649(10)
The Federal Reserve System
659(15)
Control of the Monetary Base
662(5)
The Monetary Base and Monetary Aggregates
667(7)
Effects of Federal Reserve Actions
674(9)
The Neutrality of Open-Market Operations
674(1)
The Amount of Financial Intermediation
675(8)
Summary
683(1)
Important Terms and Concepts
684(2)
Questions and Problems
686(5)
CHAPTER 18 THE INTERPLAY BETWEEN NOMINAL AND REAL VARIABLES - WHAT IS THE EVIDENCE?
691(30)
The Phillips Curve
693(3)
The Relationship between Unemploymentand the Rates of Change of Wages, Prices, and Money-Long-Term Evidence for the United Kingdom and the United States
696(5)
Cross-Country Relations between Nominal and Real Variables
701(2)
The Cyclical Behavior of Money and the Price Level
703(8)
Behavior from 1959 to 1996
703(3)
Behavior from 1880 to 1940
706(1)
A Study of Price Surprises
707(1)
Studies of Unanticipated Money
708(3)
Does Money Affect the Economy, or Is It the Economy That Affects Money?
711(4)
Seasonal Fluctuations in Money
714(1)
Implications of the Evidence
715(1)
Summary
715(2)
Important Terms and Concepts
717(1)
Questions and Problems
718(3)
CHAPTER 19 MONEY AND BUSINESS FLUCTUATIONS IN THE MARKET - CLEARING MODEL
721(36)
The Structure of a Model with Local Markets
722(8)
Supply of Goods in a Local Market
724(2)
Consumer Demand
726(1)
Clearing of the Local Market
726(2)
Disturbances to Local Markets
728(2)
Changes in the Stock of Money
730(1)
Imperfect Information about Money and the General Price Level
730(15)
Clearing of a Local Commodity Market When Information Is Incomplete
732(1)
Changes in Money When There Is Incomplete Information
732(5)
Persisting Effects of Money on Real Variables
737(1)
The Neutrality of Perceived Changes in Money
738(1)
Implications for Monetary Policy
738(1)
Stagflation
739(1)
Real Effects from the Volatility of Money
740(2)
Incomplete Information about Prices and Money: Is It Significant?
742(2)
Implications of the Model for Cyclical Fluctuations
744(1)
Rules versus Discretion
745(5)
Summary
750(1)
Important Terms and Concepts
751(1)
Questions and Problems
752(5)
CHAPTER 20 THE KEYNESIAN THEORY OF BUSINESS FLUCTUATIONS
757(51)
A Simple Keynesian Model
758(7)
The Rationing of Sales
760(2)
The Choice of Work Effort
762(2)
The Keynesian Consumption Function
764(1)
Determination of Output in the Keynesian Model
765(9)
The Determination of Employment
771(1)
The Keynesian Investment Function
772(1)
The Investment Accelerator
773(1)
IS LM Analysis and the Role of the Interest Rate
774(12)
Variations in Output and the Interest Rate
777(1)
Fiscal Policy in the Keynesian Model
778(1)
Changes in the Price Level
779(3)
Changes in the Quantity of Money
782(1)
Shifts in the Demand for Money
782(1)
IS LM Analysis and General Market Clearing
783(1)
The Supply Side in the Keynesian Model
783(1)
Inflation in the Keynesian Model
784(2)
Cyclical Properties of the Keynesian Model
786(6)
The Aggregate Supply-Aggregate Demand Model
787(5)
Sticky Prices and New Keynesian Economics
792(6)
Long-Term Contracts
794(3)
Some Empirical Evidence on the Contracting Approach
797(1)
Summary
798(2)
Important Terms and Concepts
800(3)
Questions and Problems
803(5)
BIBLIOGRAPHY 808(14)
GLOSSARY 822(14)
AUTHOR INDEX 836(4)
SUBJECT INDEX 840

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