Macroeconomics (Web-enabled Edition) / Edition 8

Macroeconomics (Web-enabled Edition) / Edition 8

by Robert J. Gordon
     
 

ISBN-10: 0321052293

ISBN-13: 9780321052292

Pub. Date: 12/07/1999

Publisher: Pearson Education

Product Details

ISBN-13:
9780321052292
Publisher:
Pearson Education
Publication date:
12/07/1999
Edition description:
Older Edition
Pages:
656
Product dimensions:
8.25(w) x 1.12(h) x 10.37(d)

Table of Contents

Preface: To the Instructor xvii
Preface: To the Student xxvi
PART ONE INTRODUCTION AND MEASUREMENT 1(62)
What Is Macroeconomics?
3(24)
How Macroeconomics Affects Our Everyday Lives
3(2)
Defining Macroeconomics
5(1)
Business Cycles, Inflation, and "Natural Real GDP"
6(5)
A Century of Business Cycles
11(2)
Macroeconomics in the Short Run and Long Run
13(2)
The Six Macroeconomic Puzzles
15(7)
Taming Business Cycles: Stabilization Policy
22(1)
The "Internationalization" of Macroeconomics
23(4)
How Does U.S. Economic Performance Rank?
24(3)
The Measurement of Income, Prices, and Unemployment
27(36)
Why We Care About Income
27(1)
The Circular Flow of Income and Expenditure
28(1)
What Transactions Should Be Included in Income and Expenditure?
29(2)
Components of Expenditure
31(8)
Where to Find the Numbers: A Guide to the Data
32(7)
A Summary of Types of Spending
39(2)
How Much Income Flows from Business Firms to Households?
41(2)
Nominal GDP, Real GDP, and the GDP Deflator
43(5)
Saving, Investment, and Government Budgets Around the World
44(4)
How Nominal GDP Is Split Between Inflation and Changes in Real GDP
48(4)
How to Calculate Inflation, Real GDP Growth, or Any Other Growth Rate
51(1)
Measuring Unemployment
52(3)
Unemployment and the Output Ratio
55(8)
PART TWO INCOME, INTEREST RATES, POLICY, AND THE OPEN ECONOMY 63(138)
The Simple Keynesian Theory of Income Determination
65(28)
Business Cycles, Unemployment, and Income Determination
65(1)
Planned Expenditure
66(4)
Why Did U.S. Saving Almost Vanish in 1998?
70(2)
The Economy In and Out of Equilibrium
72(6)
The Multiplier Effect
78(2)
Recessions and Fiscal Policy
80(4)
Tax Changes and the Multiplier
84(3)
International Trade, Net Exports, and the Multiplier
87(6)
How the Asian Crisis Worsened U.S. Net Exports
88(5)
The IS-LM Model
93(31)
Introduction
93(1)
Interest Rates and Rates of Return
94(1)
The Relation of Autonomous Planned Spending to the Interest Rate
95(6)
How Interest Rates Affect House Sales
100(1)
The IS Curve
101(5)
Learning About Diagrams: The IS Curve
103(3)
Why People Use Money
106(1)
Income, the Interest Rate, and the Demand for Money
107(3)
The LM Curve
110(4)
Learning About Diagrams: The LM Curve
113(1)
The IS Curve Meets the LM Curve
114(1)
Monetary Policy in Action
115(2)
How Fiscal Expansion Can "Crowd Out" Investment
117(7)
How Japan Uses Fiscal Policy
118(6)
Monetary Policy, Fiscal Policy, and the Government Budget
124(34)
Introduction
124(1)
Strong and Weak Effects of Monetary Policy
125(3)
Strong and Weak Effects of Fiscal Policy
128(2)
Using Fiscal and Monetary Policy Together
130(4)
Japan's Encounter with Dorothy, Snow White, and a Twin-Turbo Jet
134(1)
Japanese Policy Paralysis: Similarities to and Differences from the U.S. Great Depression
134(4)
The Pervasive Effects of the Government Budget
138(2)
The U.S. Government Budget Deficit in Historical Perspective
140(2)
The Structural and Cyclical Budget Surplus and Deficit
142(4)
National Saving and the Consequences of the Government Budget
146(5)
Budget Deficits and National Saving Around the World
149(2)
Conclusion: The Role of Monetary and Fiscal Policy
151(7)
The Elementary Algebra of the IS-LM Model
155(3)
International Trade, Exchange Rates, and Macroeconomic Policy
158(43)
Introduction
158(2)
Foreign Trade, the Balance of Payments, and International Indebtedness
160(4)
Exchange Rates
164(1)
The Market for Foreign Exchange
165(4)
Nominal and Real Exchange Rates in the Long Run
169(5)
Big Mac Meets PPP
172(2)
Exchange Rate Systems
174(3)
The East Asian Crisis of 1997--98
177(4)
Determinants of Net Exports
181(4)
The Real Exchange Rate and Interest Rate
185(3)
The IS-LM Model in a Small Open Economy
188(5)
Capital Mobility and Exchange Rates in a Large Open Economy
193(2)
Summary of Monetary and Policy Effects in Open Economies
194(1)
Conclusion: Economic Policy in the Open Economy
195(6)
PART THREE AGGREGATE DEMAND, AGGREGATE SUPPLY, AND INFLATION 201(82)
Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy
203(34)
The Role of Aggregate Demand and Supply
203(1)
Flexible Prices and the AD Curve
204(2)
Shifting the Aggregate Demand Curve with Monetary and Fiscal Policy
206(3)
Learning About Diagrams: The AD Curve
207(2)
Alternative Shapes of the Short-Run Aggregate Supply Curve
209(2)
The Aggregate Supply Curve When the Nominal Wage Rate Is Constant
211(2)
How the Wage Rate Is Set
213(4)
Learning About Diagrams: The SAS Curve
214(3)
Fiscal and Monetary Expansion in the Short and Long Run
217(5)
How Do Labor Markets Differ in the United States and Japan?
218(3)
Summary of the Economy's Adjustment to an Increase in Aggregate Demand
221(1)
Classical Macroeconomics: The Quantity Theory of Money and the Self-Correcting Economy
222(2)
The Keynesian Revolution: The Failure of Self-Correction
224(6)
What Caused the Great Depression?
230(7)
Inflation: Its Causes and Cures
237(46)
Introduction
237(1)
Real GDP, the Inflation Rate, and the Short-Run Phillips Curve
238(3)
The Adjustment of Expectations
241(3)
Learning About Diagrams: The Short-Run (SP) and Long-Run (LP) Phillips Curves
243(1)
Nominal GDP Growth and Inflation
244(2)
Effects of an Acceleration in Nominal GDP Growth
246(2)
Expectations and the Inflation Cycle
248(3)
Recession as a Cure for Inflation
251(2)
How Large Is the Sacrifice Ratio?
253(3)
Did Disinflation in Europe Differ from That in the United States?
254(2)
The Importance of Supply Disturbances
256(3)
The Response of Inflation and Real GDP to a Supply Shock
259(4)
The Goldilocks Economy---Why Inflation Was So Low in the 1990s
263(6)
Inflation and Output Fluctuations: Recapitulation of Causes and Cures
269(14)
The Elementary Algebra of the SP-DG Model
275(8)
PART FOUR MACROECONOMICS IN THE LONG RUN: GROWTH AND THE PUBLIC DEBT 283(92)
The Theory of Economic Growth
285(32)
The Importance of Economic Growth
285(2)
Standards of Living as the Consequence of Economic Growth
287(3)
The Growth Experience of Seven Countries over the Last Century
288(2)
The Production Function and Economic Growth
290(4)
Solow's Theory of Economic Growth
294(4)
Technology in Theory and Practice
298(2)
Puzzles That Solow's Theory Cannot Explain
300(4)
Endogenous Growth Theory
304(3)
The Economic Miracle and Malaise of the Four Tigers
307(3)
Conclusion: Are There Secrets of Growth?
310(7)
General Functional Forms and the Production Function
315(2)
Explanations of Slow Growth in Productivity and Real Wages
317(32)
America's Greatest Economic Problem?
317(1)
Concepts of Productivity and the Real Wage
318(2)
Behavior of Real Wages and Productivity in the United States
320(6)
Does Slow Productivity Growth Cause Slow Real Wage Growth, or Vice Versa?
326(3)
Sources of Adverse Productivity Shocks
329(5)
Can Labor Supply Shifts Contribute an Explanation?
334(3)
Is the U.S. Productivity Slowdown Unique?
336(1)
The Role of Growing Inequality
337(5)
Is Real Wage Stagnation a Figment of Measurement Error?
342(3)
Bias in Price Indexes and Implications of Recent Improvements
344(1)
Conclusion: What Policies Are Available to Boost Growth?
345(4)
The Government Budget and the Public Debt
349(26)
Introduction: The Debate Over the U.S. Government Budget
349(1)
Long-Run Effects of Fiscal Policy on Economic Growth and Welfare
350(2)
The Future Burden of the Government Debt
352(3)
Will the Government Remain Solvent?
355(3)
The Debt-GDP Ratio: How Does the United States Compare?
357(1)
Historical Behavior of the Debt-GDP Ratio Since 1790
358(2)
How the Budget Deficit Grew and Disappeared
360(3)
Alternative Views of Fiscal Policy: Supply-Side Economics
363(2)
Alternative Views of Fiscal Policy: The Barro-Ricardo Equivalence Theorem
365(2)
How Should Social Security Be "Saved"?
367(4)
The Budget Surplus Recasts the Debate
371(4)
PART FIVE STABILIZATION POLICY IN AN OPEN ECONOMY 375(110)
The Goals of Stabilization Policy: Low Inflation and Low Unemployment
377(41)
The Costs and Causes of Inflation
377(2)
Money and Inflation
379(4)
Money Growth and Inflation
381(2)
Interest Rates and Inflation
383(3)
The Government Budget Constraint and the Inflation Tax
386(4)
Starting and Stopping a Hyperinflation
390(3)
Costs of a Fully Anticipated Inflation: Creeping Inflation versus Hyperinflation
393(4)
The Wizard of Oz as a Monetary Allegory
394(3)
Indexation and Other Reforms to Reduce the Costs of Inflation
397(2)
The Indexed Bond Has Arrived
398(1)
Why the Unemployment Rate Cannot Be Reduced to Zero
399(1)
Sources of Mismatch Unemployment
400(3)
Turnover Unemployment and Job Search
403(3)
Theories to Explain High European Unemployment
406(7)
The Divergence of Unemployment Rates in the United States and Europe
408(5)
Conclusion: Solutions to the Inflation and Unemployment Dilemma
413(5)
Money and Financial Markets
418(34)
Money in a World of Many Financial Assets and Liabilities
418(1)
Financial Institutions, Markets, and Instruments
419(4)
Definitions of Money
423(4)
Smart Cards, E-Money, and the Money Supply
426(1)
High-Powered Money and Determinants of the Money Supply
427(4)
The Fed's Three Tools for Changing the Money Supply
431(4)
Theories of the Demand for Money
435(4)
How Financial Deregulation and Innovation Steepened the IS and LM Curves
439(4)
Why the Federal Reserve "Sets" Interest Rates
443(9)
Where in the World Is All the U.S. Currency?
446(6)
Stabilization Policy in the Closed and Open Economy
452(33)
The Central Role of Demand Shocks
452(2)
Stabilization Targets and Instruments in the Activists' Paradise
454(4)
Rules vs. Activism in a Nutshell: The Optimism-Pessimism Grid
457(1)
Policy Rules
458(2)
Policy Pitfalls: Lags and Uncertain Multipliers
460(6)
Was the Fed Responsible for Economic Stability in the 1990s?
466(5)
Time Inconsistency, Credibility, and Reputation
471(3)
Should Monetary Policy Target the Exchange Rate?
474(1)
Rules versus Discretion: An Assessment
475(10)
The Euro Arrives, but Should It?
476(9)
PART SIX SOURCES OF INSTABILITY IN THE PRIVATE ECONOMY 485(60)
Instability in the Private Economy: Consumption Behavior
487(30)
Consumption and Economic Stability
487(1)
Main Features of U.S. Consumption Data
488(2)
Background: The Conflict Between the Time-Series and Cross-Section Evidence
490(3)
Forward-Looking Behavior: The Permanent-Income Hypothesis
493(4)
Forward-Looking Behavior: The Life-Cycle Hypothesis
497(4)
Rational Expectations and Other Amendments to the Simple Forward-Looking Theories
501(6)
Why Do Some Countries Save So Much?
504(3)
Bequests and Uncertainty
507(2)
Did the Stock Market Cause the Collapse in the Household Saving Rate?
509(5)
Conclusion: Consumption and the Case For and Against Activism
514(3)
Instability in the Private Economy: Investment
517(28)
Investment and Economic Stability
517(1)
The Historical Instability of Investment
518(2)
The Accelerator Hypothesis of Net Investment
520(3)
The Simple Accelerator and the Postwar U.S. Economy
523(3)
The Flexible Accelerator
526(1)
The Neoclassical Theory of Investment Behavior
527(3)
User Cost and the Role of Monetary and Fiscal Policy
530(4)
Tobin's q: Does It Explain Investment Better Than the Accelerator or Neoclassical Theories?
532(2)
Business Confidence, Speculation, and Overbuilding
534(2)
The Level and Variability of Investment Around the World
536(1)
Booms and Busts in Commercial Real Estate Construction
536(3)
Investment as a Source of Instability of Output and Interest Rates
539(1)
Conclusion: Investment and the Case For and Against Activism
540(5)
PART SEVEN DEBATES AT THE MACROECONOMIC FRONTIER 545(2)
New Classical Macro Confronts New Keynesian Macro
547(1)
Introduction: Classical and Keynesian Economics, Old and New
547(1)
Imperfect Information and the "Fooling Model"
548(3)
The Lucas Model and the Policy Ineffectiveness Proposition
551(4)
The Real Business Cycle Model
555(1)
Productivity Fluctuations in the United States and Japan
556(5)
New Classical Macroeconomics: Limitations and Positive Contributions
561(3)
Essential Features of the New Keynesian Economics
564(2)
Why Small Nominal Rigidities Have Large Macroeconomic Effects
566(4)
Coordination Failures and Indexation
570(1)
Long-Term Labor Contracts as a Source of the Business Cycle
571(2)
"Real" Sources of Wage Stickiness
573(2)
Assessment of the New Keynesian Model
575(5)
Conclusion: Where We Stand
580(1)
The Evolution of Events and Ideas
580(1)
The Reaction of Ideas to Events, 1923--47
581(3)
The Reaction of Ideas to Events, 1947--69
584(4)
The Reaction of Ideas to Events, 1970--99
588(6)
The Reaction of Ideas to Events in the World Economy
594(2)
How Does Macroeconomics Differ in the United States and Europe?
596(1)
What We Know About the Six Puzzles
597(2)
Macro Mysteries: Unsettled Issues and Debates
599
Appendixes
A: Time Series Data for the U.S. Economy: 1875--1999
A1
B: International Annual Time Series Data for Selected Countries: 1960--1997
A8
C Data Sources and Methods
A14
Glossary G1
Index I1

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