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ECON 303 Intermediate Macroeconomics Instructor : Bernard Malamud Office: BEH 502 Phone (702) 895 –3294 Fax: 895 – 1354 Email: bernard.malamud@unlv.edu Website: www.unlv.edu/faculty/bmalamud Office hours: MW 11:30 – 12:30 pm, 2:30 – 3:30 pm a nd by appointment.
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ECON 303 Intermediate Macroeconomics • Instructor: Bernard Malamud • Office: BEH 502 • Phone (702) 895 –3294 • Fax: 895 – 1354 • Email: bernard.malamud@unlv.edu • Website: www.unlv.edu/faculty/bmalamud • Office hours: MW 11:30 – 12:30 pm, 2:30 – 3:30 pm • and by appointment
Course Objectives Refresh your command of • Macroeconomic terminology eco-talk • Macro Facts • Schools of thought
Course Objectives • Master MODELS • Demand Side Models AD • Multiplier • IS – LM • Supply Side Models AS • Wage setting – Price setting • Phillips Curve • Role of Expectations … in theory and in practice • Stabilizing an Unstable Economy • Understanding the financialcrisis and Slump • Revolution and evolution in macro-thought • Solow GrowthModel
Macro – variables: Real and Nominal • Output … Real GDP… Growth Rate Employment – Unemployment • Wage level – Price level Inflation … CPI, GDP Deflator • Interest rates Macro Time Frames • Short-run … sticky price • Medium-run … price adjusts • Long-run … economic growth
Macro Facts: Recession and Slump The Long Slump
Volcker Disinflation Volcker Disinflation Great Recession Great Recession Great Recession Oil Shock Oil Shock Oil Shock Natural rate from CBO based on demographics & changing labor market institutions, e.g., temporary employment. Natural Rate
The Manipulated and Understated LIBOR Federal Funds Rate London Interbank Offer Rate (LIBOR)
Americans Do Debt Household mortgages Federal Gov’t Business debt Total Debt Non-Financial Sectors Consumer credit
Macro Facts: Trade Deficit, Goods & Services Imports Exports
Major currencies/$ Broad basket of currencies/$
Where to Find the Numbers • http://research.stlouisfed.org/fred2/ • www.bls.gov/data/ • www.economist.com • www.bea.doc.gov • http://www.gpoaccess.gov/eop/ • www.oecd.org
Macroeconomics The course is divided in three parts: Short -run / Medium-run / Long-run Short – run (sticky price): IS / LM AD LM: (M/P)d = (M/P)s (M/P)d = L(Y,i) Ms = [1/(c + r(1-c))]H = {money multiplier} x {monetary base} IS:Y = C + I + G C = c0 + c1 YD = c0 + c1 (Y - T) I = I0 + b1 Y - b2 i Y = {spending multiplier} x {autonomous spending} Medium – run (flexible price): AD/AS IS/LM AD PS/WS AS PS: P = (1+ μ)(W/A) WS: W= Pe Ae f(u,z) SRAS and MRAS • In medium - run, Pe = P (W/P)WS = (W/P)PS = A / (1+ μ) • Natural/Structural/Equilibrium Rate of Unemployment (un ) • “Full - employment” rate of output (YFE)The Green Shaft When AD or AS shift: MR equilibrium SR equilibrium P new MR equilibrium Productivity and equilibrium rate of unemployment: Ae = A only in long - run “Natural rate” decreases with unexpected increase in A Long – run (factor supplies change): Growth Steady state: s(Y/AN) = (δ + gN + gA )(K/AN) For simple Cobb-Douglas function: Y = Kα (AN)1-α Y/AN = {s/((δ + gN + gA )}α/(1-α) Golden - rule saving rate = α
Americans Do Debt Household mortgages Federal Gov’t Business debt Consumer credit