Macroeconomics / Edition 3

Macroeconomics / Edition 3

by Olivier Blanchard

The fundamental goals of this text are to provide an integrated view of macroeconomics and to make close contact with current macroeconomic events. This Intermediate Macroeconomics text is organized around a set of core chapters followed by three optional extensions. The Core covers the Short Run, Medium Run, and Long Run and is then followed by the three Extensions:… See more details below


The fundamental goals of this text are to provide an integrated view of macroeconomics and to make close contact with current macroeconomic events. This Intermediate Macroeconomics text is organized around a set of core chapters followed by three optional extensions. The Core covers the Short Run, Medium Run, and Long Run and is then followed by the three Extensions: Openness, Expectations, and Pathologies. The book concludes with a section on policy, although policy issues are also sprinkled throughout most chapters. Already known for its global emphasis and empirical applications of theory, the third edition has attempted to simplify many of the more difficult topics in macroeconomics. Theoretical material is always presented within the context of a real-world application in three ways: words, graphs, and with algebra.

Product Details

Prentice Hall
Publication date:
Prentice-Hall Series in Economics
Edition description:
Older Edition
Product dimensions:
8.10(w) x 10.00(h) x 1.20(d)

Table of Contents

Chapter 1A Tour of the World3
1-1The United States4
1-2The European Union8
1-4Looking Ahead16
AppendixWhere to Find the Numbers?19
Chapter 2A Tour of the Book21
2-1Aggregate Output22
2-2The Other Major Macroeconomic Variables26
2-3A Road Map34
AppendixThe Construction of Real GDP, and Chain-Type Indexes40
The Core43
The Short Run43
Chapter 3The Goods Market45
3-1The Composition of GDP46
3-2The Demand for Goods48
3-3The Determination of Equilibrium Output51
3-4Investment Equals Saving: An Alternative Way of Thinking About Goods-Market Equilibrium58
3-5Is the Government Omnipotent? A Warning60
Chapter 4Financial Markets65
4-1The Demand for Money66
4-2The Determination of the Interest Rate. I69
4-3The Determination of the Interest Rate. II75
4-4Two Alternative Ways to Think About the Equilibrium81
Chapter 5Goods and Financial Markets: The IS-LM Model87
5-1The Goods Market and the IS Relation88
5-2Financial Markets and the LM Relation93
5-3Putting the IS and the LM Relations Together96
5-4Using a Policy Mix101
5-5How Does the IS-LM Model Fit the Facts?102
The Medium Run111
Chapter 6The Labor Market113
6-1A Tour of the Labor Market114
6-2Movements in Unemployment116
6-3Wage Determination120
6-4Price Determination124
6-5The Natural Rate of Unemployment125
6-6Where We Go from Here129
AppendixWage- and Price-Setting Relations Versus Labor Supply and Labor Demand132
Chapter 7Putting All Markets Together: The AS-AD Model135
7-1Aggregate Supply136
7-2Aggregate Demand139
7-3Equilibrium in the Short Run and in the Medium Run141
7-4The Effects of a Monetary Expansion144
7-5A Decrease in the Budget Deficit149
7-6Changes in the Price of Oil152
Chapter 8The Natural Rate of Unemployment and the Phillips Curve161
8-1Inflation, Expected Inflation, and Unemployment162
8-2The Phillips Curve163
8-3A Summary and Many Warnings169
AppendixFrom the Aggregate Supply Relation to a Relation Between Inflation, Expected Inflation, and Unemployment179
Chapter 9Inflation, Activity, and Nominal Money Growth181
9-1Output, Unemployment, and Inflation182
9-2The Medium Run186
9-4Expectations, Credibility, and Nominal Contracts193
9-5The U.S. Disinflation, 1979-1985196
The Long Run201
Chapter 10The Facts of Growth203
10-1Growth in Rich Countries Since 1950204
10-2A Broader Look Across Time and Space208
10-3Thinking About Growth: A Primer212
Chapter 11Saving, Capital Accumulation, and Output219
11-1Interactions Between Output and Capital220
11-2Implications of Alternative Saving Rates223
11-3Getting a Sense of Magnitudes230
11-4Physical Versus Human Capital236
AppendixThe Cobb-Douglas Production Function and the Steady State240
Chapter 12Technological Progress and Growth243
12-1Technological Progress and the Rate of Growth244
12-2The Determinants of Technological Progress251
12-3The Facts of Growth Revisited254
12-4Epilogue: The Secrets of Growth258
AppendixConstructing a Measure of Technological Progress265
Chapter 13Technological Progress, Wages, and Unemployment267
13-1Productivity, Output, and Unemployment in the Short Run268
13-2Productivity and the Natural Rate of Unemployment272
13-3Technological Progress and Distribution Effects278
Chapter 14Expectations: The Basic Tools289
14-1Nominal Versus Real Interest Rates290
14-2Expected Present Discounted Values293
14-3Nominal and Real Interest Rates, and the IS-LM Model298
14-4Money Growth, Inflation, and Nominal and Real Interest Rates299
AppendixDeriving the Expected Present Discounted Value Using Real or Nominal Interest Rates308
Chapter 15Financial Markets and Expectations311
15-1Bond Prices and Bond Yields312
15-2The Stock Market and Movements in Stock Prices320
15-3Bubbles, Fads, and Stock Prices326
AppendixArbitrage and Stock Prices332
Chapter 16Expectations, Consumption, and Investment335
16-3The Volatility of Consumption and Investment349
AppendixDerivation of the Expected Present Value of Profits Under Static Expectations353
Chapter 17Expectations, Output, and Policy355
17-1Expectations and Decisions: Taking Stock356
17-2Monetary Policy, Expectations, and Output360
17-3Deficit Reduction, Expectations, and Output364
The Open Economy371
Chapter 18Openness in Goods and Financial Markets373
18-1Openness in Goods Markets374
18-2Openness in Financial Markets383
18-3Conclusions and a Look Ahead390
Chapter 19The Goods Market in an Open Economy395
19-1The IS Relation in the Open Economy396
19-2Equilibrium Output and the Trade Balance399
19-3Increases in Demand, Domestic or Foreign400
19-4Depreciation, the Trade Balance, and Output405
19-5Looking at Dynamics: The J-Curve408
19-6Saving, Investment, and the Trade Balance412
Appendix 1Multipliers--Belgium Versus the United States415
Appendix 2Derivation of the Marshall-Lerner Condition416
Chapter 20Output, the Interest Rate, and the Exchange Rate417
20-1Equilibrium in the Goods Market418
20-2Equilibrium in Financial Markets419
20-3Putting Goods and Financial Markets Together422
20-4The Effects of Policy in an Open Economy423
20-5Fixed Exchange Rates426
AppendixFixed Exchange Rates, Interest Rates, and Capital Mobility433
Chapter 21Exchange Rate Regimes437
21-1Fixed Exchange Rates and the Adjustment of the Real Exchange Rate in the Medium Run438
21-2Exchange Rate Crises Under Fixed Exchange Rates444
21-3Exchange Rate Movements under Flexible Exchange Rates448
21-4Choosing Between Exchange Rate Regimes451
AppendixThe Real Exchange Rate, and Domestic and Foreign Real Interest Rates458
Chapter 22Depressions and Slumps463
22-1Disinflation, Deflation, and the Liquidity Trap464
22-2The Great Depression471
22-3The Japanese Slump477
Chapter 23High Inflation489
23-1Budget Deficits and Money Creation490
23-2Inflation and Real Money Balances492
23-3Deficits, Seignorage, and Inflation494
23-4How Do Hyperinflations End?499
Back to Policy507
Chapter 24Should Policy Makers Be Restrained?509
24-1Uncertainty and Policy510
24-2Expectations and Policy514
24-3Politics and Policy518
Chapter 25Monetary Policy: A Summing Up529
25-1The Optimal Inflation Rate530
25-2The Design of Monetary Policy535
25-3The Fed in Action542
Chapter 26Fiscal Policy: A Summing Up549
26-1The Government Budget Constraint550
26-2Four Issues in Fiscal Policy558
26-3The U.S. Budget563
Chapter 27Epilogue: The Story of Macroeconomics571
27-1Keynes and the Great Depression572
27-2The Neoclassical Synthesis572
27-3The Rational Expectations Critique575
27-4Current Developments579
27-5Common Beliefs581
Appendix 1An Introduction to National Income and Product Accounts1
Appendix 2A Math Refresher6
Appendix 3An Introduction to Econometrics12

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