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Macroeconomics: Introduction

Explore key macroeconomic concepts and issues such as business cycles, inflation, unemployment, and economic growth. Learn about government roles in recessions, monetary policy implications, and theories on boom and bust cycles. Dive into historical events like the Great Depression and World War II's impact on the economy. Develop a comprehensive understanding of macroeconomic principles for informed decision-making.

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Macroeconomics: Introduction

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  1. Macroeconomics:Introduction Xu Hu Texas A&M University

  2. Outline • Problems macroeconomists are interested in. (Very Brief) • Modeling Concerns (no slide) • Approach for this course(no slide)

  3. 9/11/2001 First oil price shock Great Depression Second oil price shock World War II Important issues in macroeconomics U.S. Real GDP per capita (2000 dollars) • Business Cycles & Industrial Fluctuations long-run upward trend…

  4. Business Cycles & Industrial Fluctuations • What are the causes of Boom and Bust? Real Business Cycles theory Excessive Credit Type theory – e.g. Austrian School …… 2. What is the government’s role in the recessions? Fiscal Policy: Tax and Subsidy …… Monetary Policy: Fed cut the interest rate ? ……

  5. Business Cycles & Industrial Fluctuations Great Depression Fluctuations of the whole economy are sometimes accompanied with “boom and bust “ in the Financial Market

  6. Recent Crisis Dow Jones Industrial Ave S&P 500 Unemployment Rate

  7. U.S. inflation rate(% per year) • Inflation Prior to the Great Depression, the inflation rate was fairly low.

  8. Inflation • What do high inflation rates mean to the public?- “The cost of inflation” • Inflation and Monetary Policy

  9. German Hyperinflation 1919-1923. Germany, 1923: banknotes had lost so much value that they were used as wallpaper. Source: wiki

  10. U.S. unemployment rate(% of labor force) • Unemployment : Voluntary and Involuntary

  11. Economic Growth 1.What are the factors which influence the speed of economic growth ? 2. How to explain the “gap” between developing countries and developed countries?

  12. Among themselves, macroeconomists often do not have consensuses on certain issues, even some important issues. • Here is an interesting example.

  13. Crude Oil prices : Fundamentals V.S. Speculation

  14. Debate between two economists • Paul Krugman : The Oil Non-bubble(May 12, 2008) • Guillermo Calvo : Exploding commodity prices, lax monetary policy, and sovereign wealth funds(June 20, 2008) • Paul Krugman:Calvo on Commodities (June 21, 2008)

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