Textbook Table of Contents
Table of Contents
Table of Contents
- Coverpage
- Half title page
- Title page
- Copyright page
- Dedication
- Brief Contents
- Contents
- Acknowledgments
- To the Student
- To the Teacher
- Part I: Introduction
- 1.1 The Problems of Macroeconomics
- 1.2 What Is Macroeconomics?
- 1.2.1 Macroeconomics Defined
- 1.2.2 The Origins of Macroeconomics
- 1.2.3 Positive versus Normative Macroeconomics
- 1.3 Doing Macroeconomics
- 1.3.1 Macroeconomics as a Science
- Social Sciences versus Natural Sciences
- Rational Behavior
- Observation versus Controlled Experiments
- 1.3.2 Models and Maps
- Models as Maps
- Mathematical Models
- The Uses of Models
- The Scope of Models
- Graphical or Diagrammatic Models
- 1.4 Where Do We Go from Here?
- Part II: The National Accounts
- 2.1 How Big Is the Economy?
- 2.2 GDP and the Economic Process
- 2.2.1 Stocks and Flows
- 2.2.2 The Circular Flow
- The Domestic Private Sector
- Investment Savings, Capital, and Time
- The Government Sector
- The Foreign Sector
- A Bird's-Eye View of the Economy
- 2.3 The National Accounting Identities
- 2.3.1 The Production-Expenditure Identity
- 2.3.2 The Disposable-Income Identity
- 2.3.3 The Sectoral-Deficits Identity
- 2.3.4 The Inflow-Outflow Identity
- Box 2.1. The Twin-Deficits Problem and the Sectoral-Deficits Identity
- 2.4 Real Gross Domestic Product
- 2.4.1 Real and Nominal Quantities
- 2.4.2 Converting Nominal to Real GDP
- 2.4.3 International GDP Comparisons
- 2.4.4 Population and Real per Capita GDP
- 2.5 GDP through Time
- 2.5.1 Visualizing Growth 1: Growth Rates
- 2.5.2 Visualizing Growth 2: Logarithmic Graphs
- 2.6 Measuring Inflation
- 2.6.1 Inflation and Deflation
- 2.6.2 Measuring Inflation Using the GDP Deflator
- 2.7 Economic Behavior and the National Accounts: Aggregate Demand and Supply – A Prelude to Later Chapters
- 3.1 What Is a Final Product?
- 3.1.1 Quid Pro Quo
- 3.1.2 Final and Intermediate Products
- 3.1.3 Existing Goods
- 3.2 Product and Income
- 3.3 Domestic versus National Product
- 3.4 Depreciation and Net Product
- 3.5 Limits, Judgments, and Puzzles
- 3.5.1 Investment or Consumption?
- 3.5.2 Nonmarket Production
- Home Production
- The Third-Party Test
- Owner-Occupied Housing
- Government Services
- 3.5.3 The Black Economy
- 3.5.4 Bads and Regrettables
- 3.5.5 GDP and Welfare
- 3.6 Measuring GDP
- 3.6.1 Sources and Methods
- 3.6.2 Revisions
- 3.6.3 Annualization and Seasonal Adjustment
- 3.7 Putting It All Together: Reading the NIPAs
- 3.7.1 The National-Income-and-Product Account
- 3.7.2 The Personal-Income-and-Outlay Account
- 3.7.3 Three Sectors, Three Deficits
- 4.1 Constructing Price Indices
- 4.1.1 The Laspeyres (or Base-Weighted) Index
- 4.1.2 The Paasche (or Current-Weighted) Index
- 4.1.3 The Fisher-Ideal Index
- 4.1.4 The Chain-Weighted Index
- 4.1.5 Price Indices and Real GDP
- 4.1.6 The Implicit Price Deflator
- 4.2 Alternative Price Indices
- 4.2.1 The Consumer Price Index (CPI)
- 4.2.2 The Personal Consumption Expenditure Deflator
- 4.2.3 The Producer Price Index (PPI)
- 4.3 Core Inflation
- 4.3.1 The Core Rate of Inflation
- 4.3.2 The Weighted-Median CPI
- Part III: Trends and Cycles
- 5.1 Decomposing Time Series
- 5.2 The Business Cycle
- 5.2.1 The Language of Business Cycles
- 5.2.2 Dating the Business Cycle
- 5.2.3 The Typical Business Cycle
- 5.3 The Business Cycle and the Economy
- 5.3.1 What Causes the Business Cycle?
- 5.3.2 The Classification of Economic Indicators
- 5.3.3 Is the Business Cycle Predictable?
- Part IV: Financial Markets
- 6.1 The Financial System and the Real Economy
- 6.1.1 The Role of Money and Finance
- Real Flows and Financial Flows
- The Monetary Economy
- Financial Instruments and Financial Intermediaries
- The Flow of Funds
- 6.1.2 The Flow of Funds Accounts
- Real and Financial Wealth
- Accounting and Balance Sheets
- Flow Accounts
- The Assets-and-Liabilities Accounts
- 6.2 Principles of Valuation
- 6.2.1 Present Value
- The Principle of Similarity and Replacement
- Two Key Concepts: Opportunity Cost and Present Value
- Four Properties of Present Value
- 6.2.2 Real and Nominal Value
- A Useful Approximation
- The Ex Ante versus the Ex Post Real Rate
- 6.3 The Main Financial Instruments
- 6.3.1 Debt
- What Are Bonds?
- The Mechanics of Bond Pricing
- Types of Bonds
- Prices and Yields
- 6.3.2 Money
- 6.3.3 Equity
- What Are Stocks?
- The Mechanics of Stock Pricing
- Stock Prices and Yields
- Stock Market Indices
- 6.4 Financial Markets and Aggregate Demand
- 7.1 Five Questions about Interest Rates
- 7.2 The Market for Financial Assets
- 7.2.1 Substitution and Arbitrage
- Similarity and Replacement Again
- Supply and Demand
- Reaching Equilibrium in a Financial Market
- Arbitrage
- 7.2.2 Efficient Markets
- Inside and Outside Views of Financial Markets
- The Efficient-Markets Hypothesis
- Challenges to the Efficient-Markets Hypothesis
- Two Answers
- 7.3 Risk
- 7.3.1 Default Risk
- Risk and Return
- Federal Government Bonds
- Rating Risk
- Default Risk and Interest Rates
- 7.3.2 Price or Interest-Rate Risk
- 7.4 The Term Structure of Interest Rates
- 7.4.1 The Relationship of Interest Rates of Different Maturities
- 7.4.2 The Expectations Theory of the Term Structure
- Arbitrage across Different Maturities
- Expectations and the Shape of the Yield Curve
- Alternative Portfolio Strategies
- Implicit Expectations
- 7.4.3 The Role of Risk
- 7.5 Inflation and Interest Rates
- 7.5.1 The Effect of Inflation on the Supply and Demand for Bonds
- 7.5.2 The Fisher Effect and the Fisher Hypothesis
- Box 7.1. Measuring Expected Inflation
- 7.6 The Level of Real Interest Rates
- 7.6.1 Monetary Policy and Short Rates
- 7.6.2 Arbitrage to Real Returns
- 7.7 The Five Questions about Interest Rates Revisited
- Appendix: The LM Curve
- 7.A.1 Money Supply and Money Demand
- The Real Supply of Money
- Transactions Demand for Money
- Money Demand and Interest Rates
- The Money Demand and Supply Curves
- 7.A.2 The LM Curve
- Deriving the LM Curve
- What Shifts the LM Curve?
- What Use Is the LM Curve?
- 7.A.3 The Limitations of the LM Model
- 8.1 The Global Economy
- 8.2 Balance-of-Payments Basics
- 8.2.1 The Current Account
- 8.2.2 The Capital Account
- 8.2.3 The Balance-of-Payments Identities
- 8.3 Exchange-Rate Basics
- 8.3.1 Exchange Rates as the Relative Price of Money
- The Price of One Currency in Terms of Another
- Appreciation and Depreciation
- 8.3.2 The Real Exchange Rate
- The Real Price of a Foreign Good
- Purchasing Power and Price Indices
- 8.3.3 Effective Exchange Rates
- 8.4 The Foreign Exchange and Financial Markets
- 8.4.1 The Foreign-Exchange Market
- Foreign Exchange and Real Trade
- Foreign Exchange and Financial Trade
- Direct and Indirect Exchange
- 8.4.2 Exchange Rates and Relative Prices
- The Law of One Price
- Purchasing-Power Parity
- The Mutual Adjustment of Prices and Exchange Rates
- How Well Does Purchasing-Power Parity Work in Practice?
- 8.4.3 Exchange Rates and Interest Rates
- The Exchange Rate, Capital Flows, and Interest Parity
- Uncovered Interest Parity
- Exchange-Rate Risk
- Interest-Rate Differentials and Short-Run Deviations from Purchasing-Power Parity
- Interest Parity in Practice
- The Limits of Short-Run Exchange Rate Models
- Part V: Aggregate Supply
- 9.1 The Production Decisions of Firms
- 9.1.1 Production Possibilities
- Technology
- The Production Function
- Measurement Issues
- Basic Properties of the Production Function
- Returns to Scale
- 9.1.2 Optimal Production
- Profit Maximization
- Marginal Products and Factor Prices
- Choosing Input Levels
- 9.2 Aggregate Supply
- 9.2.1 The Aggregate Production Function
- 9.2.2 The Cobb-Douglas Production Function
- 9.2.3 Does the Cobb-Douglas Production Function Provide a Good Model of Aggregate Supply?
- The Cobb-Douglas Production Function Predicts Constant Factor Shares
- Are Factor Shares Constant?
- 9.2.4 A Cobb-Douglas Production Function for the United States
- 9.3 Productivity
- 9.3.1 Alternative Measures of Productivity
- Three Measures
- International Comparisons
- How Are the Productivity Measures Related?
- 9.3.2 Technological Progress
- Factor Productivity over Time
- Factor-Augmenting Technological Progress
- 9.4 Short-Run and Long-Run Aggregate Supply
- 9.4.1 Flexible and Inflexible Production Functions
- 9.4.2 Productivity and Resource Use in the Short Run
- 9.4.3 Measures of Resource Use
- Labor Utilization
- Capital Utilization
- 9.5 Potential Output
- 9.5.1 The Concept of Economic Potential
- 9.5.2 Scaled Output
- 9.6 Aggregate Supply: Questions Answered, Questions Raised
- 10.1 Why Growth Is Important
- 10.2 Accounting for Growth
- 10.2.1 Production at a Point in Time and Production over Time
- 10.2.2 Decomposing Economic Growth
- 10.2.3 Accounting for Growth Rates
- 10.3 The Sources of Economic Growth
- 10.3.1 Productivity and Technological Progress
- Product Innovation
- Process Innovation
- Research and Development
- 10.3.2 The Growth of Labor
- The Law of Motion of Labor
- Malthusianism
- Economic Development and the Stabilization of Population
- 10.3.3 The Growth of Capital
- 10.4 The Neoclassical Growth Model
- 10.4.1 The Process of Growth
- Balanced Growth without Technological Progress
- Balanced Growth with Technological Progress
- Unbalanced Growth
- Convergence to Balanced Growth
- Box 10.1. Relative Prices in the Growth Process
- The Speed Limit
- 10.4.2 The Solow-Swan Growth Model
- A Model with Labor-Augmenting Technological Progress
- Balanced Growth and Convergence
- Is the United States on a Balanced Growth Path?
- How Does the Steady State Shift?
- 10.5 What Accounts for Differences in the Growth of Nations?
- 10.5.1 Catching Up
- The Importance of Technology
- The Speed of Convergence
- Do Countries Converge?
- 10.5.2 Which Factors Promote Growth?
- 10.5.3 Endogenous Growth
- 10.6 Economic Growth: Achievements and Prospects
- 11.1 Labor Demand
- 11.1.1 The Firm's Demand for Labor
- Deriving the Firm's Labor-Demand Curve
- Factors That Shift the Labor-Demand Curve
- 11.1.2 The Aggregate Demand for Labor
- 11.2 Labor Supply
- 11.2.1 The Worker: Choosing Hours of Work
- The Price of Leisure
- The Labor-Leisure Choice
- The Labor-Supply Curve
- Adding Realism: Taxes
- Adding Realism: A Standard Workweek
- The Individual Labor-Supply Curve in Practice
- 11.2.2 The Worker: Choosing to Participate
- 11.2.3 Aggregate Labor Supply
- The Aggregate Labor-Supply Curve
- The Participation Rate and Average Hours
- Is the Labor Supply Stable over Time?
- 11.3 Labor Market Equilibrium
- 11.3.1 Market Clearing
- 11.3.2 Analyzing Ideal Labor Markets
- Issue 1. Tax Cuts
- Issue 2. Technological Progress and Worker Welfare
- Issue 3. Immigration, Jobs, and Real Wages
- 11.3.3 The Labor Market in Practice
- 12.1 The Concepts of Employment and Unemployment
- 12.2 Measuring the Labor Market in Theory and Practice
- 12.2.1 Labor Market Data
- 12.2.2 The Unemployment Rate
- Mismatched Definitions
- Box 12.1. A Jobless Recovery?
- Transitional Unemployment
- A Real-Wage Floor
- Frictional Unemployment
- 12.2.3 Other Dimensions of Unemployment
- Part-Time Employment
- Overtime Employment
- Loosely Attached Workers
- Underemployment
- International Comparisons of Underutilization of Labor
- 12.3 The Labor-Market Process
- 12.3.1 Why Do Wages Not Fall?
- The Unemployment Puzzle
- Cutting Wages or Raising Prices
- Efficiency Wages
- Unions
- Government Actions
- 12.3.2 The Labor-Supply Process
- Job Search
- Employment Status and Job Flows
- The Duration of Unemployment
- 12.3.3 The Labor-Demand Process
- Job Creation and Destruction
- Technological Progress and the Reallocation of Labor
- Employment Policy
- Part VI: Aggregate Demand
- 13.1 A Simple Model of Aggregate Demand
- 13.1.1 Consumption Behavior
- The Consumption Function
- The Shape of the Consumption Function
- The Savings Function
- 13.1.2 Tax Behavior
- Net Taxes
- The Tax Function
- The Shape of the Tax Function
- 13.1.3 What Determines the Level of Aggregate Demand?
- The Model
- Equilibrium and Convergence to Equilibrium
- The Effect of Changes in Autonomous Expenditure on Aggregate Demand
- 13.1.4 The Multiplier
- The Static Multiplier
- A Numerical Example
- The Size of the Multiplier
- The Multiplier Process
- 13.2 Fiscal Policy
- 13.2.1 Discretionary Fiscal Policy
- Choosing the Level of Government Spending
- Setting Tax Rates
- The Balanced-Budget Multiplier
- 13.2.2 Automatic Stabilizers
- 13.3 Investment and Aggregate Demand
- 13.3.1 What Determines the Level of Investment?
- The Opportunity Cost of Investment
- Investment and Risk
- Investment and Finance (and Other Factors)
- 13.3.2 The Investment Function in Practice
- 13.3.3 The IS Curve
- Deriving the IS Curve
- An Increase in Autonomous Spending Shifts the IS Curve to the Right
- An Increase in the Rate of Return on Investment Shifts the IS Curve to the Right
- An Increase in Marginal Tax Rates Pivots the IS Curve Downward
- An Increase in the Marginal Propensity to Save
- The IS Curve and the Multipliers
- Numerical Examples
- 13.4 Aggregate Demand and the Current Account
- 13.4.1 Some Pitfalls
- 13.4.2 The Behavior of Imports and Exports
- 13.5 The Limits to Aggregate Demand Management
- 13.5.1 The Paradox of Thrift
- 13.5.2 Resource Constraints
- Appendix: The IS-LM Model
- 13.A.1 The LM Curve and Expected Inflation
- 13.A.2 Working with the IS-LM Model
- An Increase in Government Expenditure
- An Increase in the Money Supply
- An Increase in the Rate of Inflation
- 13.A.3 The IS-LM Model at Full Employment
- PART A. CONSUMPTION
- 14.1 Simple Consumption Functions and the Real World
- 14.2 The Permanent-Income/Life-Cycle Hypothesis
- 14.2.1 Consumption Smoothing
- 14.2.2 Consumption, Income, and Wealth
- 14.2.3 The Aggregate Permanent-Income Hypothesis
- From the Individual to the Economy as a Whole
- How the Permanent-Income Hypothesis Explains the Data
- 14.2.4 The Permanent-Income Hypothesis and Fiscal Policy
- 14.3 Borrowing Constraints, Rules of Thumb, and Consumption
- Box 14.1. Testing the Permanent-Income Hypothesis:A Natural Experiment
- PART B. INVESTMENT
- 14.4 An Asset-Based View of Capital and Investment
- 14.4.1 Evaluating an Investment Project
- The Present Value of an Investment Project
- Internal Rate of Return
- Investment and Risk
- 14.4.2 The Rate of Investment
- 14.4.3 Investment and the Stock Market
- 14.5 Aggregate Investment
- 14.5.1 Factors Governing Aggregate Investment
- 1. Opportunity Cost
- 2. Expected Future Profits
- 3. Risk
- 4. The Relative Price of Capital Goods
- 5. The Level of the Capital Stock
- 14.5.2 The Accelerator
- 14.5.3 Investment and Fiscal Policy
- Part VII: Macroeconomic Dynamics
- 15.1 The Interaction of Aggregate Supply and Aggregate Demand
- 15.1.1 Supply Fluctuations
- Adjustments to Supply Factors When Wages Are Flexible
- Adjustments to Supply Factors When Wages Are Inflexible
- Technological Progress and Capital Obsolescence
- Cost-Push Inflation
- 15.1.2 Demand Fluctuations
- When Aggregate Demand Falls Short of Aggregate Supply
- When Aggregate Demand Exceeds Aggregate Supply
- Distinguishing the Types of Inflation
- 15.2 Unemployment and Output Fluctuations
- 15.2.1 What Changes the Unemployment Rate?
- 15.2.2 The Modified Balanced Growth Path
- 15.2.3 Okun's Law
- 15.2.4 The Dynamics of Resource Utilization
- 15.3 Inflation and Unemployment
- 15.3.1 Pricing Behavior
- 15.3.2 The Phillips Curve
- 15.3.3 The Natural Rate of Unemployment and NAIRU
- The Concept of the Natural Rate
- An Estimate of the Natural Rate of Unemployment
- NAIRU and the Formation of Expectations
- An Estimate of NAIRU
- The Phillips Curve and Resource Utilization
- NAIRU and Full Employment
- 15.3.4 Inflation and Supply Factors
- Wage Inflation and Labor Productivity
- Supply Shocks
- 15.3.5 Stagflation and Credibility
- 15.4 Another Look at the Limits of Demand Management
- 15.5 Aggregate Supply and Demand: Putting It Together
- 15.5.1 A Steady State
- 15.5.2 Shifts in Aggregate Demand
- 15.5.3 Shifts in Aggregate Supply
- Part VIII: Macroeconomic Policy
- 16.1 Monetary and Fiscal Policy
- 16.1.1 The Government Budget Constraint
- 16.1.2 Monetary Policy and the Real Economy
- 16.2 The Federal Reserve and the Banking System
- 16.2.1 The Central Bank
- Some History
- The Structure of the Federal Reserve System
- 16.2.2 Bank Balance Sheets
- The Fed's Balance Sheet
- Commercial Bank Balance Sheets
- 16.2.3 The Mechanics of Monetary Policy
- The Classic Federal Funds Market
- Open-Market Operations
- Open-Mouth Operations
- Interest-Bearing Reserves
- Discount-Window Policy
- Reserve Requirements
- 16.3 The Opportunity-Cost or Interest-Rate Channel of Monetary Policy
- 16.3.1 Using Short Rates to Control Long Rates
- Scenario 1: A Credible Permanent Change in the Federal-Funds Rate
- Scenario 2: The Public Believes the Change in the Federal-Funds Rate Is Temporary
- Credibility
- 16.3.2 Long Rates, Real Rates, Output, and Inflation
- A Stable Inflation Rate
- A Cumulative Process
- The Effective State of Monetary Policy Depends on the State of the Economy
- 16.4 The Credit Channel
- 16.4.1 The Narrow Credit Channel
- 16.4.2 The Broad Credit Channel
- 16.4.3 The Operation of the Credit Channel
- Box 16.1. The Monetary Policy Response to the Financial Crisis of 2008
- 16.5 The Conduct and Limits of Monetary Policy
- 16.5.1 The Goals of Monetary Policy
- Inflation and Employment
- Hot or Cold Monetary Policy
- Balancing the Risks
- 16.5.2 Rules versus Discretion
- (i) Ignorance
- (ii) Policy Lags
- (iii) A Stable Economic Environment
- (iv) Time Consistency
- 16.5.3 How the Federal Reserve Behaves
- Discretion or Rules?
- The Taylor Rule
- Box 16.2. Concepts of Potential Output
- Does the Fed Follow a Taylor Rule?
- The Limits of the Taylor Rule
- 16.6 Monetary Policy and International Finance
- 16.6.1 Controlling the Exchange Rate
- Direct Intervention
- Foreign-Exchange and Monetary Policy
- 16.6.2 Exchange-Rate Regimes
- Fixed versus Floating Exchange Rates
- Varieties of Exchange-Rate Management
- Fixed versus Floating: Advantages and Disadvantages
- Currency Areas
- Appendix: The Monetarist Experiment of the 1980s: An Application of IS-LM Analysis
- 16.A.1 The Situation in 1979
- The Problem and Paul Volcker
- Monetarism and the Fed
- 16.A.2 Implementation
- An IS-LM Analysis
- Reserve Targeting
- 16.A.3 Post-Mortem
- Expectations and Outcomes
- What Went Wrong?
- 17.1 Countercyclical Fiscal Policy
- 17.1.1 Fiscal Responses to Aggregate Demand and Supply Shocks
- Active and Passive Fiscal Policy
- Aggregate-Demand Shocks
- Aggregate-Supply Shocks
- Mixed Shocks
- The Cost of Misperception
- 17.1.2 The Limits of Countercyclical Fiscal Policy
- The Lag in Fiscal Policy
- Permanent versus Temporary Policies
- State and Local Budgets
- 17.2 Fiscal Policy in the Long Run
- 17.2.1 Monetary Policy as Fiscal Policy
- Seigniorage
- Risks of Hyperinflation
- 17.2.2 Deficits and the Debt through Time
- 17.2.3 Crowding Out
- Functional Finance
- Zero-Sum Crowding Out
- Crowding Out or Crowding In?
- Displacement of Private Expenditure
- Deficits and Interest Rates
- 17.2.4 Wealth Effects
- Are Government Bonds Net Worth?
- The Limits of Ricardian Equivalence
- 17.2.5 Taxes and Incentives
- Average and Marginal Tax Rates
- Supply-Side Economics
- Costs of Complexity
- 17.3 The Burden of the Debt
- 17.3.1 Debt and Growth
- Debt and Income
- Outgrowing Debt
- Inflation and the Debt
- 17.3.2 Capital and Consumption Spending
- 17.3.3 Domestic and Foreign Debt
- 17.4 Summing Up: Functional Finance Again
- Part IX: Macroeconomic Data
- G.1 Economic Data
- G.1.1 Variables
- G.1.2 The Dimensions of Data
- Keeping Track of Units
- Stocks and Flows
- Annualization and Aggregation
- Percentages and Percentage Points
- G.1.3 Seasonal Adjustment
- G.2 Graphs
- G.2.1 Cross-Sectional Graphs
- Univariate Cross-Sectional Graphs
- Multivariate Cross-Sectional Graphs
- G.2.2 Time-Series Graphs
- Time-Series Plots
- Time-Series Scatterplots
- G.2.3 Guide to Good Graphics
- A Good Graph Is Informationally Rich
- A Good Graph Is Clear and Self-Contained
- A Good Graph Is Aesthetically Pleasing
- The Golden Rule of Graphics
- G.3 A Guide to Good Tables
- G.4 Descriptive Statistics
- G.4.1 Histograms and Frequency Distributions
- G.4.2 Measures of Central Tendency
- The (Arithmetic) Mean
- The Weighted Mean
- The Median
- The Geometric Mean
- G.4.3 Measures of Variation
- Variance
- Standard Deviation
- Coefficient of Variation
- G.5 Making Inferences from Descriptive Statistics
- G.5.1 Homogeneity
- G.5.2 Stationarity
- G.6 The Normal Distribution
- G.7 Type I and Type II Error
- G.8 Using Index Numbers
- G.8.1 Index Numbers
- G.8.2 Price Indices
- Laspeyres (or Base-Weighted) Index
- Paasche (or Current-Weighted) Index
- The Fisher-Ideal Index
- G.9 Real and Nominal Magnitudes
- G.9.1 Conversions between Real and Nominal Magnitudes
- Converting Nominal Data to Real
- Converting Real Data to Nominal
- Converting Real Data of One Reference Period to That of Another Period
- G.9.2 Real Values Using Chain-Weighted Indices
- G.10 Growth Rates
- G.10.1 The Essentials of Growth Rates
- Simple Growth Rates
- Compound Annualization
- Annual Growth Rates
- Average Growth Rates
- G.10.2 When Should Growth Rates Be Compounded?
- G.10.3 Extrapolation
- G.10.4 The Algebra of Growth Rates
- G.11 Logarithms
- G.11.1 What Are Logarithms?
- The Concept of the Logarithm
- The Antilogarithm
- The Natural Logarithm
- G.11.2 Calculating with Logarithms
- G.11.3 Logarithms and Growth
- Logarithmic Derivatives and Percentage Changes
- Logarithms and Growth Rates
- Continuous Compounding
- Further Examples
- The Rule of 72
- G.11.4 Logarithmic Graphs
- G.12 Detrending
- G.12.1 Constant Trends
- Using Constant Trends
- Linear Trends
- Exponential and Other Constant Trends
- G.12.2 Moving-Average Trends
- The Moving-Average Trend
- Calculating Moving-Average Trends
- Dealing with the Endpoint Problem
- G.12.3 Differences or Growth Rates
- G.13 Correlation and Causation
- G.13.1 The Nature of Correlation
- G.13.2 Covariance
- G.13.3 The Correlation Coefficient
- G.13.4 Two Important Properties of Correlations
- Correlation Is Symmetrical
- Correlation Is Not Transitive
- G.13.5 Causation versus Correlation
- The Nature of Causation
- Properties of Causation
- G.13.6 Causal Structure
- Mutual and Cyclical Causes
- Direct and Indirect Causes
- Common Causes
- G.13.7 Causal Inference
- Time Order
- Economic Theory and Common Sense
- G.14 Relationships between Stationary and NonstationaryTime Series
- G.14.1 Nonsense Correlations
- G.14.2 Genuine Relationships between NonstationaryTime Series
- Short-Run Relationships
- Long-Run Relationships
- G.14.3 Do Not Mix Stationary and NonstationaryTime Series
- G.15 Regression
- G.15.1 Linear Regression
- The Regression Line
- Goodness of Fit
- G.15.2 Nonlinear Regression
- G.15.3 The Direction of Regression
- G.15.4 Nonsense Regression
- G.16 The Cobb-Douglas Production Function
- G.16.1 The Properties of the Cobb-Douglas ProductionFunction: An Example
- G.16.2 The Mathematics of the Cobb-DouglasProduction Function
- No Free Lunch
- More Inputs, More Output
- Diminishing Returns to Factors of Production
- Increasing Returns to Scale
- G.16.3 Estimating Labor's Share (α) of Output from Data
- Symbols
- Glossary
- Guide to Online Resources
- 1 Macroeconomics and the Real World
- 2 The National Accounts and the Structure of the Economy
- 3 Understanding Gross Domestic Product
- 4 Measuring Prices and Inflation
- 5 Trends and Cycles
- 6 The Financial System
- 7 The Behavior of Interest Rates
- 8 The International Financial System and the Balance of Payments
- 9 Aggregate Production
- 10 Economic Growth
- 11 The Ideal Labor Market
- 12 Unemployment and the Labor-Market Process
- 13 An Introduction to Aggregate Demand
- 14 Consumption and Investment: A Deeper Look
- 15 The Dynamics of Output, Unemployment, and Inflation
- 16 Monetary Policy
- 17 Fiscal Policy
- A Guide to Working with Economic Data