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Book Details
Abstract
A Unified View of the Latest Macroeconomic Events
In Macroeconomics, European Edition Blanchard, Giavazzi and Amighini present a unified, global and European view of macroeconomics, enabling students to see the connections between goods markets, financial markets, and labour markets worldwide.
Organized into two parts, the text contains a core section that focuses on short-, medium-, and long-run markets and three major extensions that offer more in-depth coverage of the issues at hand. From the major economic crisis and monetary policy in Europe and globally to growth in China, the text helps students make sense not only of current macroeconomic events but also of events that may unfold in the future.
Integrated, detailed boxes in the Third European Edition have been updated to convey the life of macroeconomics today; reinforce lessons from the models; and help students employ and develop their analytical and evaluative skills.
This book gives students a thorough understanding of macroeconomics by taking a unified view of the subject, allowing connections to be made between the short, medium and long run.
Re-written almost from scratch in light of the experience of the Great Recession, this text is essential reading for anyone studying macroeconomics in the aftermath of the financial crisis.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Title Page | iii | ||
| Copyright Page | iv | ||
| Brief Contetns | v | ||
| Contents | vii | ||
| List of figures | xi | ||
| List of tables | xv | ||
| List of Focus boxes | xvii | ||
| About the authors | xviii | ||
| Preface | xix | ||
| Publisher’s acknowledgements | xxii | ||
| INTRODUCTION | 1 | ||
| Chapter 1 A tour of the world | 2 | ||
| 1.1 The crisis | 3 | ||
| 1.2 The United States | 5 | ||
| 1.3 The euro area | 8 | ||
| 1.4 China | 12 | ||
| 1.5 Looking ahead | 15 | ||
| Key terms | 16 | ||
| Questions and problems | 16 | ||
| Further reading | 17 | ||
| Appendix: Where to find the numbers | 18 | ||
| Chapter 2 A tour of the book | 20 | ||
| 2.1 Aggregate output | 21 | ||
| 2.2 The unemployment rate | 26 | ||
| 2.3 The inflation rate | 30 | ||
| 2.4 Output, unemployment and the inflation rate: Okun’s law and the Phillips curve | 33 | ||
| 2.5 The short run, the medium run and the long run | 35 | ||
| 2.6 A tour of the book | 36 | ||
| Summary | 37 | ||
| Key terms | 38 | ||
| Questions and problems | 38 | ||
| Further reading | 40 | ||
| Appendix: The construction of real GDP and chain-type indexes | 41 | ||
| THE CORE | 43 | ||
| THE SHORT RUN | 45 | ||
| Chapter 3 The goods market | 46 | ||
| 3.1 The composition of GDP | 47 | ||
| 3.2 The demand for goods | 48 | ||
| 3.3 The determination of equilibrium output | 51 | ||
| 3.4 Investment equals saving: an alternative way of thinking about the goods-market equilibrium | 58 | ||
| 3.5 Is the government omnipotent? A warning | 60 | ||
| Summary | 62 | ||
| Key terms | 62 | ||
| Questions and problems | 63 | ||
| Chapter 4 Financial markets: I | 66 | ||
| 4.1 The demand for money | 67 | ||
| 4.2 Determining the interest rate: I | 70 | ||
| 4.3 Determining the interest rate: II | 74 | ||
| 4.4 The liquidity trap | 78 | ||
| Summary | 80 | ||
| Key terms | 80 | ||
| Questions and problems | 81 | ||
| Further reading | 82 | ||
| Appendix: The determination of the interest rate when people hold both currency and deposit accounts | 83 | ||
| Chapter 5 Financial markets: the IS–LM model | 85 | ||
| 5.1 The goods market and the IS relation | 86 | ||
| 5.2 Financial markets and the LM relation | 90 | ||
| 5.3 Putting the IS and the LM relations together | 91 | ||
| 5.4 Using a policy mix | 94 | ||
| 5.5 How does the IS–LM model fit the facts? | 98 | ||
| Summary | 100 | ||
| Key terms | 101 | ||
| Questions and problems | 101 | ||
| Further reading | 103 | ||
| Chapter 6 Financial markets II | 104 | ||
| 6.1 Nominal versus real interest rates | 105 | ||
| 6.2 Risk and risk premiums | 108 | ||
| 6.3 The role of financial intermediaries | 110 | ||
| 6.4 Extending the IS–LM | 114 | ||
| 6.5 From a housing problem to a financial crisis | 116 | ||
| Summary | 124 | ||
| Key terms | 125 | ||
| Questions and problems | 126 | ||
| Further reading | 129 | ||
| THE MEDIUM RUN | 133 | ||
| Chapter 7 The labour market | 134 | ||
| 7.1 A tour of the labour market | 135 | ||
| 7.2 Movements in unemployment | 137 | ||
| 7.3 Wage determination | 140 | ||
| 7.4 Price determination | 144 | ||
| 7.5 The natural rate of unemployment | 144 | ||
| 7.6 Where we go from here | 148 | ||
| Summary | 148 | ||
| Key terms | 149 | ||
| Questions and problems | 149 | ||
| Further reading | 151 | ||
| Appendix: Wage- and price-setting relations versus labour supply and labour demand | 152 | ||
| Chapter 8 The Phillips curve, the natural rate of unemployment and inflation | 153 | ||
| 8.1 Inflation, expected inflation and unemployment | 155 | ||
| 8.2 The Phillips curve and its mutations | 156 | ||
| 8.3 The Phillips curve and the natural rate of unemployment | 159 | ||
| 8.4 A summary and many warnings | 161 | ||
| Summary | 168 | ||
| Key terms | 168 | ||
| Questions and problems | 169 | ||
| Further reading | 171 | ||
| Appendix: Derivation of the relation between inflation, expected inflation and unemployment | 172 | ||
| Chapter 9 Putting all markets together: from the short to the medium run | 173 | ||
| 9.1 The IS–LM–PC model | 174 | ||
| 9.2 Dynamics and the medium-run equilibrium | 177 | ||
| 9.3 Fiscal consolidation revisited | 182 | ||
| 9.4 The effects of an increase in the price of oil | 183 | ||
| 9.5 Conclusions | 188 | ||
| Summary | 189 | ||
| Key terms | 189 | ||
| Questions and problems | 190 | ||
| THE LONG RUN | 195 | ||
| Chapter 10 The facts of growth | 196 | ||
| 10.1 Measuring the standard of living | 197 | ||
| 10.2 Growth in rich countries since 1950 | 200 | ||
| 10.3 A broader look across time and space | 204 | ||
| 10.4 Thinking about growth: a primer | 206 | ||
| Summary | 210 | ||
| Key terms | 210 | ||
| Questions and problems | 211 | ||
| Further reading | 212 | ||
| Chapter 11 Saving, capital accumulation and output | 213 | ||
| 11.1 Interactions between output and capital | 214 | ||
| 11.2 The implications of alternative saving rates | 217 | ||
| 11.3 Getting a sense of magnitudes | 224 | ||
| 11.4 Physical versus human capital | 229 | ||
| Summary | 232 | ||
| Key terms | 232 | ||
| Questions and problems | 232 | ||
| Further reading | 234 | ||
| Appendix: The Cobb–Douglas production function and the steady state | 235 | ||
| Chapter 12 Technological progress and growth | 236 | ||
| 12.1 Technological progress and the rate of growth | 237 | ||
| 12.2 The determinants of technological progress | 243 | ||
| 12.3 Institutions, technological progress and growth | 247 | ||
| 12.4 The facts of growth revisited | 251 | ||
| Summary | 253 | ||
| Key terms | 253 | ||
| Questions and problems | 254 | ||
| Further reading | 256 | ||
| Appendix: Constructing a measure of technological progress | 257 | ||
| Chapter 13 Technological progress: the short, the medium and the long runs | 259 | ||
| 13.1 Productivity, output and unemployment in the short run | 260 | ||
| 13.2 Productivity and the natural rate of unemployment | 263 | ||
| 13.3 Technological progress, churning and inequality | 267 | ||
| Summary | 274 | ||
| Key terms | 275 | ||
| Questions and problems | 275 | ||
| Further reading | 277 | ||
| EXTENSIONS | 279 | ||
| EXPECTATIONS | 281 | ||
| Chapter 14 Financial markets and expectations | 282 | ||
| 14.1 Expected present discounted values | 283 | ||
| 14.2 Bond prices and bond yields | 287 | ||
| 14.3 The stock market and movements in stock prices | 294 | ||
| 14.4 Risk, bubbles, fads and asset prices | 300 | ||
| Summary | 304 | ||
| Key terms | 304 | ||
| Questions and problems | 305 | ||
| Further reading | 306 | ||
| Appendix: Deriving the expected present discounted value using real or nominal interest rates | 307 | ||
| Chapter 15 Expectations, consumption and investment | 309 | ||
| 15.1 Consumption | 310 | ||
| 15.2 Investment | 316 | ||
| 15.3 The volatility of consumption and investment | 323 | ||
| Summary | 325 | ||
| Key terms | 325 | ||
| Questions and problems | 325 | ||
| Appendix: Derivation of the expected present value of profits under static expectations | 328 | ||
| Chapter 16 Expectations, output and policy | 329 | ||
| 16.1 Expectations and decisions: taking stock | 330 | ||
| 16.2 Monetary policy, expectations and output | 333 | ||
| 16.3 Deficit reduction, expectations and output | 336 | ||
| Summary | 341 | ||
| Key terms | 342 | ||
| Questions and problems | 342 | ||
| THE OPEN ECONOMY | 345 | ||
| Chapter 17 Openness in goods and financial markets | 346 | ||
| 17.1 Openness in goods markets | 348 | ||
| 17.2 Openness in financial markets | 354 | ||
| 17.3 Conclusions and a look ahead | 361 | ||
| Summary | 361 | ||
| Key terms | 362 | ||
| Questions and problems | 362 | ||
| Further reading | 364 | ||
| Chapter 18 The goods market in an open economy | 365 | ||
| 18.1 The IS relation in the open economy | 366 | ||
| 18.2 Equilibrium output and the trade balance | 369 | ||
| 18.3 Increases in demand – domestic or foreign | 370 | ||
| 18.4 Depreciation, the trade balance and output | 376 | ||
| 18.5 Looking at dynamics: the J-curve | 380 | ||
| 18.6 Saving, investment and the current account balance | 382 | ||
| Summary | 383 | ||
| Key terms | 384 | ||
| Questions and problems | 384 | ||
| Further reading | 386 | ||
| Appendix: Derivation of the Marshall–Lerner condition | 387 | ||
| Chapter 19 Output, the interest rate and the exchange rate | 388 | ||
| 19.1 Equilibrium in the goods market | 389 | ||
| 19.2 Equilibrium in financial markets | 390 | ||
| 19.3 Putting goods and financial markets together | 394 | ||
| 19.4 The effects of policy in an open economy | 395 | ||
| 19.5 Fixed exchange rates | 399 | ||
| Summary | 402 | ||
| Key terms | 403 | ||
| Questions and problems | 403 | ||
| Appendix: Fixed exchange rates, interest rates and capital mobility | 405 | ||
| Chapter 20 Exchange rate regimes | 408 | ||
| 20.1 The medium run | 409 | ||
| 20.2 Exchange rate crises under fixed exchange rates | 412 | ||
| 20.3 Exchange rate movements under flexible exchange rates | 416 | ||
| 20.4 Choosing between exchange rate regimes | 419 | ||
| Summary | 427 | ||
| Key terms | 427 | ||
| Questions and problems | 428 | ||
| Further reading | 431 | ||
| Appendix 1: Deriving the IS relation under fixed exchange rates | 432 | ||
| Appendix 2: The real exchange rate and domestic and foreign real interest rates | 432 | ||
| BACK TO POLICY | 435 | ||
| Chapter 21 Should policy makers be restrained? | 436 | ||
| 21.1 Uncertainty and policy | 437 | ||
| 21.2 Expectations and policy | 440 | ||
| 21.3 Politics and policy | 444 | ||
| Summary | 449 | ||
| Key terms | 450 | ||
| Questions and problems | 450 | ||
| Further reading | 452 | ||
| Chapter 22 Fiscal policy: a summing up | 453 | ||
| 22.1 What we have learned | 454 | ||
| 22.2 The government budget constraint: deficits, debt, spending and taxes | 455 | ||
| 22.3 Ricardian equivalence, cyclical adjusted deficits and war finance | 465 | ||
| 22.4 The dangers of high debt | 469 | ||
| Summary | 477 | ||
| Key terms | 477 | ||
| Questions and problems | 478 | ||
| Further reading | 480 | ||
| Chapter 23 Monetary policy: a summing up | 481 | ||
| 23.1 What we have learned | 482 | ||
| 23.2 From money targeting to inflation targeting | 483 | ||
| 23.3 The optimal inflation rate | 489 | ||
| 23.4 Unconventional monetary policy | 494 | ||
| 23.5 Monetary policy and financial stability | 496 | ||
| Summary | 499 | ||
| Key terms | 500 | ||
| Questions and problems | 500 | ||
| Further reading | 503 | ||
| Appendix: The time inconsistency problem: Barro and Gordon model | 504 | ||
| EPILOGUE | 507 | ||
| Chapter 24 The story of macroeconomics | 508 | ||
| 24.1 Keynes and the Great Depression | 509 | ||
| 24.2 The neoclassical synthesis | 509 | ||
| 24.3 The rational expectations critique | 512 | ||
| 24.4 Developments in macroeconomics up to the 2009 crisis | 515 | ||
| 24.5 First lessons for macroeconomics after the crisis | 518 | ||
| Summary | 520 | ||
| Key terms | 520 | ||
| Further reading | 521 | ||
| Appendix 1 An introduction to national income and product accounts | 522 | ||
| Appendix 2 A maths refresher | 528 | ||
| Appendix 3 An introduction to econometrics | 533 | ||
| Glossary | 538 | ||
| Symbols used in this book | 549 | ||
| Index | 551 |