Intuition. Macroeconomics studies Aggregate Pheonomena of: GDP / Employment / Investment / Inflation & Money / LR growth / Investment, Govn’t Expenditure, Exports. Historically, it began formally from the 20th century after the Great Depression; before that it ways just microeconomics. (Keynes & Hayaek)
def. Static vs Dynamic models.
- Static: comparing at the same point in time (=‘comparative static’) ¶Comparative statics, like an exogenous increase in demand causing to increase
- Dynamic: comparing at different points in time def. Economic Time of Short Run (SR), Medium Run (MR), and Long Run (LR) are distinguished by what the agents are allowed to do. ¶in SR, firms are allowed to change prices, but not leave; in the LR only firms are allowed to leave.
def. Real vs. Nominal.
- Real: real things as units (cars, hours, gallons), or base-year currency
- Nominal: values in currency at a certain year The real values are the actual use-value. Nominal takes into account exchange-value, which complicates things. (This is assuming the Efficient Market Hypothesis i.e. markets find the correct use-value)
Macroeconomic Indicators
Equilibirum & Optimization
- Agents of the Macro Economy
- Circular Flow of Income
- General Equilibirum Theory
- Macroeconomic General Equilibrium (One-period)
- Household Social Security Consumption-Only Optimization
Growth
- Economic Growth
- Malthusian Growth ← pre-industrial
- Smitian Growth ← colonialism as division of labor
- Solow Growth Model ← industrial, technical innovation
- Human Capital Accumulation & Growth ← post-industrial
- Schumpeterian Growth ← tech bro growth (innovation, creative destruction)
Money
Business Cycles
- ! In this section, assume , i.e.
- Real Business Cycle Model
- Coordination Failure Business Cycle Model
- New Keynesian Business Cycles Model