A Course in Intermediate Macroeconomics

A very tentative outline of things to come.... over the next ten years.

Title

Table of Contents (all links to the subpage location)

    • Outline topics one

    • topic two

    • topic three

Key Concepts: (all links to the subpage location)

topic 1

topic 2

topic 3

etc...

topic 4

topic 5

topic 5

etc....

1 Introduction to Macroeconomics

    • 1.1 What is macroeconomics.

    • 1.2 Key open questions.

    • 1.3 Key concepts in, and approaches to macroeconomics.

    • 1.4 Outline of this course.

2 Measuring the Macroeconomy

    • 2.1 The Macro Facts - Data, Empirics

3 The Long Run - Several Subtopics

    • 3.1 Overview of long-run economics growth

    • 3.2 The Production Function -

    • 3.3 Simple Model of a Small Open Economy

    • 3.4 Labor Market - wages and unemployment. Natural rate, hysterisis.

    • 3.5 Introduction to the Monetary System.

    • 3.6 Inflation - prices.

    • 3.7 Economics Growth (the very long run)

      • 3.8 Fact about economics growth

      • 3.9 Solow Model - neoclassical growth model, exogenous growth model....

      • 3.10 Romer Model - endogenous technology growth...

3.1 Overview of long-term economic growth

3.2 Model of Production

Table of Contents

  1. Overview - The Production Function

    • Cobb-Douglas Production Function

    • Desiderata, constant returns to scale, decreasing returns to factors.

  3. Equilibrium in a (very) simple economy

    • Finding equilibrium wages, rental rate, marginal product of labor and capital.

    • Factor share of income..

  4. How well does the model fit reality?

  5. Total Factor Productivity.

  6. The "A" in the functional form of the Cobb-Douglas Production Function.

Key Concepts:

⋅ Output / Income / "Y"

⋅ Factors

⋅ Capital & Labor

⋅ Production function

⋅ Cobb-Douglas production function

⋅ General Equilibrium.

⋅ Factor prices

⋅ Wage & equilibrium wage

⋅ Marginal product of labor

⋅ Rental rate of capital, and equilibrium.

⋅ Marginal product of capital

⋅ Capital share of income

⋅ Labor share of income

⋅ Per-capita levels

⋅ Per worker production function

⋅ Capital per-capita

⋅ Per-capita Labor

⋅

⋅ Empirically fitting the production model

⋅ Total factor productivity (TFP)

3.3 Simple Model of a Small Open Economy

    • SOE Model

    • National savings, private and public savings.

    • Interest Rate.

    • Real and Nominal exchange rate.

3.4 The Labor Market - Wages and Unemployment.

    • Intro

    • Empirical, stylistic facts

    • Search Model - McCall Search Model

3.5 Introduction to the Monetary System

3.6 Inflation

3.9 Solow Growth Model

Table of Contents

  1. Introduction and Motivation for Model

  2. Model Assumptions and Set-up.

  3. Per-worker capital and production. The Law of Motion of Capital. The steady state solution and convergence.

  4. Solow Diagram

  5. Transition Dynamics - convergence to steady state - time series.

  6. Applications and Examples - Shocks! See the effect of changes to the model via the solow diagram, equations and time series graphs.

  7. Solow with Population Growth to the Model

    • Solve for steady state and new LOM of capital equation.

    • Show growth rate of k*, y*, Y, I, K and C

    • Solow diagram with population growth.

    • Balanced growth path. Transition dynamics, level and growth rate changes.

  8. Solow with technology growth to the Model

    • Solve for steady state and new LOM of capital equation.

    • Show growth rate of k\hat*, y\hat*, k*, y*, Y, I, K and C

    • Solow diagram with technology growth.

    • Balanced growth path. Transition dynamics, level and growth rate changes.

  9. Solow Model Growth Rates - Balanced growth path - the difference between a level effect and a change in growth rate.

  10. What are the growth rates of k\hat*, y\hat*, k*, y*, Y, I, K and C?

  11. Summary of Solow Model - what does the model tell us about economics growth? How well does the model hold up to observable facts?

  12. Applications of Solow model

  13. Numerical example with equations, diagram, and analysis of transition dynamics.

    1. Destruction of capital.

    2. Varying the savings rate.

    3. Changes in the depreciation rate.

    4. Changes in population growth rate.

    5. Changes in production technology.

Additional Content

  • Steady state, calculating the steady state of solow model (using general equations, using diagram)

    • Numerical Example, calculating the steady state given functional form for a production function.

  • Golden Rule Level of capital.

  • Total Factor Productivity

  • Solow Residual

Key Concepts:

⋅ Solow growth model

⋅ Savings Rate ⋅ Depreciation ⋅ Stock vs flow ⋅ The capital accumulation equation (the law of motion of capital)

⋅ Diminishing returns ⋅ Net investment ⋅ Steady state

⋅ Solow Diagram ⋅ Transition dynamics (convergence)

⋅ Golden rule level of capital

⋅ Effective labor

⋅ Efficiency of labor

⋅ Human capital

⋅ Labor-augmenting technology

⋅ Models of exogenous growth

⋅ Balanced growth path

3.10 Growth and Ideas - Romer Model of Endogenous Technology

4 The Short Run

    • 4.1 Introduction to Short-Run Fluctuations - booms and busts.

    • 4.2 Goods Market and Financial Markets

    • 4.3 IS Curve - Keynesian Cross/Market for Loanable Funds.

    • 4.4 IS-LM Model - Aggregate Demand

    • 4.5 Monetary Policy and the Phillips Curve - MP Curve

    • 4.6 Aggregate Supply -

    • 4.7 Stabilization Policy and the AS/AD Framework.

    • 4.8 Mundell-Fleming Model - small open economy

    • 4.9 Dynamic model of aggregate demand and aggregate supply

4.1 Introduction to Short-Run

    • Fluctuations - booms and busts.

4.3 IS Curve - Keynesian Cross/Market for Loanable Funds.

4.4 IS-LM Model - Aggregate Demand

    • Building the IS-LM Model

    • Applying the IS-LM Model

4.5 Monetary Policy and the Phillips Curve - MP Curve

4.6 Aggregate Supply

    • Phillips curve and the trade-off between inflation and unemployment.

4.7 Stabilization Policy and the AS/AD Framework.

4.8 Mundell-Fleming Model

    • IS-LM Model for a small open economy - small open economy revisited

    • Exchange rate regimes - fixed and floating regimes, revaluation.

    • Fiscal & monetary policy under a floating exchange rate regime.

    • Fiscal & monetary policy under a fixed exchange rate regime.

    • Risk premium.

    • The "trilemma", impossible trinity.

4.9 Dynamic model of aggregate demand and aggregate supply

5 Miscellaneous Topics

    • Theory

      • 5.1 Theory of Investment - what determines investment?

      • 5.2 Theories about consumer behavior

      • 5.3 Exchange Rates and International Finance

    • Policy

      • 5.4 The Government and the Macroeconomy - debt and deficits

      • 5.5 The Financial System

      • 5.6 International Trade

5.1 Theory - Theory of Investment - what determines investment?

5.2 Theory - Theories about consumer behavior

5.3 Theory - Exchange Rates and International Finance

5.4 The Government and the Macroeconomy - debt and deficits

5.5 The Financial System

5.6 International Trade

Credits and References