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  • Edition: 7th
  • Publisher: Prentice Hall
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A comprehensive, detailed, unbiased view of modern macroeconomic theory. This book traces the history of macroeconomics and the evolution of macroeconomic thought and the resulting theory and policy. Practitioners of modern macroeconomics.

Table of Contents

Prefacep. xvii
Introduction and Measurementp. 1
Introductionp. 2
What Is Macroeconomics?p. 2
Post-World War II U.S. Economic Performancep. 3
Central Questions in Macroeconomicsp. 9
Conclusionp. 12
Measurement of Macroeconomic Variablesp. 13
The National Income Accountsp. 13
Gross Domestic Productp. 14
What GDP Is Notp. 17
National Incomep. 18
Personal and Personal Disposable Incomep. 19
Some National Income Accounting Identitiesp. 21
Measuring Price Changes: Real Versus Nominal Gross Domestic Productp. 22
The Consumer Price Index and the Producer Price Indexp. 25
Measures of Cyclical Variation in Outputp. 26
Upward Bias in the Consumer Price Indexp. 27
Conclusionp. 28
Dating Business Cyclesp. 29
Macroeconomic Modelsp. 31
Classical Macroeconomics (I): Equilibrium Output and Employmentp. 32
The Starting Pointp. 32
The Classical Revolutionp. 33
Productionp. 34
Employmentp. 35
Equilibrium Output and Employmentp. 41
Conclusionp. 47
Real Business Cycles: A First Lookp. 47
Classical Macroeconomics (II): Money, Prices, and Interestp. 49
The Quantity Theory of Moneyp. 49
Money in Hyperinflationsp. 55
The Classical Theory of the Interest Ratep. 55
Policy Implications of the Classical Equilibrium Modelp. 59
Conclusionp. 63
Supply-Side Economics--A Modern Classical Viewp. 64
The Keynesian System (I): The Role of Aggregate Demandp. 66
The Problem of Unemploymentp. 66
The Simple Keynesian Model: Conditions for Equilibrium Outputp. 69
The Components of Aggregate Demandp. 73
Determining Equilibrium Incomep. 77
Changes in Equilibrium Incomep. 80
Fiscal Stabilization Policyp. 85
Conclusionp. 86
Fiscal Policy in Practicep. 87
Exports and Imports in the Simple Keynesian Modelp. 89
The Keynesian System (II): Money, Interest, and Incomep. 93
Money in the Keynesian Systemp. 93
Residential Construction and the Interest Ratep. 96
The IS-LM Curve Modelp. 104
Conclusionp. 127
The Algebra of the IS-LM Modelp. 128
The Keynesian System (III): Policy Effects in the IS-LM Modelp. 133
Factors That Affect Equilibrium Income and the Interest Ratep. 133
The Relative Effectiveness of Monetary and Fiscal Policyp. 139
Conclusionp. 148
The Monetary--Fiscal Policy Mix: Some Historical Examplesp. 149
Monetary and Fiscal Policy Multipliers in the IS--LM Curve Modelp. 151
The Keynesian System (IV): Aggregate Supply and Demandp. 155
The Keynesian Aggregate Demand Curvep. 156
The Keynesian Aggregate Demand Curve Combined with the Classical Theory of Aggregate Supplyp. 161
The Keynesian Contractual View of the Labor Marketp. 165
Price and Quantity Adjustments in Great Britain, 1929-1936p. 167
Labor Supply and Variability in the Money Wagep. 172
The Effects of Shifts in the Aggregate Supply Functionp. 177
Severe Supply Disruption: The Case of the Former Soviet Republicsp. 184
Conclusion: Keynes Versus the Classicsp. 185
The Monetarist Counterrevolutionp. 190
Introductionp. 190
The Reformulation of the Quantity Theory of Moneyp. 192
The Monetarist View of the Great Depressionp. 197
Fiscal and Monetary Policy: Monetarists Versus Keynesiansp. 202
Unstable Velocity and the Declining Influence of Monetarismp. 209
Conclusionp. 210
Output, Inflation, and Unemployment: Monetarist and Keynesian Viewsp. 212
The Natural Rate Theoryp. 212
Monetary Policy, Output, and Inflation: A Monetarist Viewp. 215
A Keynesian View of the Output--Inflation Trade-Offp. 221
Evolution of the Natural Rate Conceptp. 227
Conclusionp. 230
New Classical Economicsp. 232
The New Classical Attackp. 232
A Broader View of the New Classical Positionp. 241
The Keynesian Countercritiquep. 243
The New Classical Economics and the Disinflation of the 1980sp. 244
Conclusionp. 248
The Great Depression: New Classical Viewsp. 249
Real Business Cycle Theory and the New Keynesian Economicsp. 252
Real Business Cycle Modelsp. 252
Labor Market Flowsp. 259
New Keynesian Economicsp. 260
Are Prices Sticky?p. 263
Conclusionp. 267
Macroeconomic Models: A Summaryp. 269
Theoretical Issuesp. 269
Policy Issuesp. 273
Extensions of the Modelsp. 277
Consumption and Investmentp. 278
Consumptionp. 278
Declining U.S. Personal Savingp. 289
Investment Spendingp. 294
Inventories in the Most Recent Recessionp. 306
Conclusionp. 306
Money Demandp. 308
The Definition of Moneyp. 310
The Theory of the Transactions Demand for Moneyp. 311
Extensions of Keynes's Theory of the Demand for Money as a Store of Wealthp. 320
Instability of Money Demandp. 324
Conclusionp. 327
The Money Supply Processp. 329
The Federal Reserve Systemp. 329
Bank Reserves and Bank Depositsp. 333
Who Controls the Money Stock?p. 340
The Money Supply During the Great Depressionp. 344
Conclusionp. 345
Long- and Intermediate-Term Economic Growthp. 347
Long-Run Steady-State Growthp. 348
Accounting for U.S. Economic Growthp. 355
Determinants of Output Growth in Intermediate-Run Periodsp. 358
Growth and Productivity Slowdown in Other Industrialized Economiesp. 361
The Laffer Curvep. 368
Growth Policies in the Reagan, Bush, and Clinton Administrationsp. 371
Conclusionp. 373
Economic Policyp. 377
Fiscal Policyp. 378
The Goals of Macroeconomic Policyp. 378
The Goals of Macroeconomic Policymakersp. 379
Rational Expectations and the Partisan Theoryp. 383
The Federal Budgetp. 383
Budget Deficits in Seven Industrial Countriesp. 386
The Economy and the Federal Budget: The Concept of Automatic Fiscal Stabilizersp. 386
Keynesian Objections to Balanced-Budget Rulesp. 390
What About the Deficit?p. 392
Conclusionp. 398
Ricardian Equivalencep. 399
Monetary Policyp. 403
The Monetary Policymaking Processp. 403
Competing Strategies for Monetary Policy: Targeting Monetary Aggregates or Interest Ratesp. 404
Central Bank Independence and Economic Performancep. 405
Implications of Intermediate Targeting on a Monetary Aggregatep. 408
Implications of Targeting the Interest Ratep. 412
Money Stock Versus Interest Rate Targetsp. 415
The Evolution of Federal Reserve Strategyp. 417
Changes in Central Bank Institutions: Recent International Experiencep. 419
Inflation Targeting in Practice: The New Zealand Experiencep. 421
Conclusionp. 422
Open Economy Macroeconomicsp. 423
Exchange Rates and the International Monetary Systemp. 424
The U.S. Balance of Payments Accountsp. 424
Exchange Rates and the Market for Foreign Exchangep. 427
The Current Exchange Rate Systemp. 434
Advantages of Exchange Rate Flexibilityp. 437
Experience with Floating Exchange Ratesp. 442
Fixed Versus Flexible Exchange Ratesp. 447
Conclusionp. 450
The European Monetary Systemp. 451
Monetary and Fiscal Policy in the Open Economyp. 453
The Mundell-Fleming Modelp. 453
The Case of Imperfect Capital Mobilityp. 456
The Case of Perfect Capital Mobilityp. 462
The Saving--Investment Correlation Puzzlep. 468
Conclusionp. 468
Glossaryp. 471
Indexp. 475
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