Macroeconomic policy : demystifying monetary and fiscal policy

Description

Foreword Acknowledgments Contents About the Author Chapter 1: Introduction and Overview of the Fourth Edition 1.1 Chapter Overview 1.2 What´s New in This Fourth Edition Chapter 2: National Income Accounts 2.1 Paradigm Shifts: An Introduction 2.2 Some Fundamental Definitions 2.2.1 Inflation 2.2.2 GDP Deflator 2.2.3 Consumer Price Index (CPI) 2.2.4 The PCE Deflator: The Index Used by the Fed 2.3 Discussion Questions Chapter 3: Budget Deficits, Trade Deficits, and Global Capital Flows: The National Savings Identity 3.1 The National Savings Identity (NSI) 3.1.1 Two Crucial Assumptions Underlying the NSI 3.1.1.1 Microeconomics Review 3.1.2 Linking the Twin Deficits 3.2 Possible Negative Aspects of Bond-Financed Deficits 3.3 Two Cases of the NSI: The United States and China 3.3.1 US-Type NSI 3.3.2 China-Type NSI 3.4 Factors Influencing Global Capital Flows 3.4.1 Hot Capital: The Bane of Emerging Economies 3.4.2 Factors Influencing Global Capital Flows: The Cave Theory 3.5 Discussion Questions Chapter 4: Aggregate Demand: Setting the Stage for Demand-Side Stabilization 4.1 Demand-Side Stabilization 4.2 Business Cycles 4.3 Variables Underlying the Aggregate Demand: Introducing the Goods Market 4.3.1 Analyzing the Components of Aggregate Demand 4.3.2 A Preliminary Money Market and an Introduction to Quantitative Easing (QE) 4.3.3 Deriving the Aggregate Demand 4.4 Discussion Questions Chapter 5: Demand-Side Stabilization: Overheating, Hard Landing, and Sap Bubbles 5.1 Shifting the AD: Changing Government Spending 5.1.1 The Mechanism of the Multiplier Effect 5.2 Shifting the AD: Changing Monetary Policy 5.3 Shifting the AD: Tax Policy 5.4 Summarizing the Three Methods of Shifting AD 5.5 Unemployment 5.6 Inflation 5.6.1 Designing Macroeconomic Policy: An Exercise 5.6.2 Demand-Pull Inflation 5.6.3 Cost-Push Inflation 5.6.3.1 The COVID-19 Exogenous Shock: The ``One-Two´´ Punch 5.6.4 The Index of Leading Economic Activity, NAPM, and some ``Non-Traditional´´ Indicators 5.7 Discussion Questions Chapter 6: Long-Term Interest Rates, the Yield Curve, and Hyperinflation 6.1 Expected Inflation and Long-Term Interest Rates: The Fisher Effect 6.2 The Yield Curve: A Macroeconomic Perspective 6.2.1 The Global Long-Bond Warning: The Covid-19 Aftermath 6.2.2 Negative Real Rates and Sap Bubbles 6.2.3 Operation Twist: The Macroeconomic Aberration 6.3 Hyperinflations 6.3.1 The Anatomy of a Meltdown 6.3.2 Hyperinflations: Remedies 6.4 Monetary Discipline: The Hazards of Pegging 6.5 Discussion Questions Chapter 7: ISLM: The Engine Room 7.1 The IS Curve 7.1.1 Some IS Exercises 7.1.2 Introducing Taxes into the IS Curve 7.2 The LM Curve 7.2.1 Factors That Shift the LM 7.3 ISLM-ADAS Policy Exercises 7.3.1 Survival Guide to ISLM-ADAS Policy Analysis 7.3.1.1 Summarizing IS and LM Shifts 7.3.2 ISLM-ADAS Policy Experiment I 7.3.3 ISLM-ADAS Policy Experiment II 7.3.4 ISLM-ADAS Policy Exercise III: An Increase in Tax Rates 7.3.5 ISLM-ADAS Policy Exercise IV: Simultaneous Increases in Government Spending and Monetary Growth (``Fine-Tuning´´) 7.4 The Global IS 7.4.1 Global IS: A Brief Overview 7.4.1.1 Summarizing Factors That Shift the Global IS 7.5 Discussion Questions Chapter 8: The Classical Model 8.1 Classical Aggregate Supply: Derivation 8.1.1 Derivation Sequence 8.2 Policy Exercise I: Increase in G 8.3 ISLM-ADAS Policy Exercise II: Increase in M 8.4 The ``Natural´´ Rates of GDP and Employment Growth 8.5 Discussion Questions Chapter 9: The Keynesian Model 9.1 Keynesian Aggregate Supply: Diagrammatic Derivation 9.1.1 Derivation Sequence 9.1.2 Survival Guide for ISLM with Keynesian AS (K-AS) 9.1.3 Policy Exercise I: Increase in G 9.1.4 Policy Exercise II: Increase in Monetary Growth 9.1.5 Policy Exercise III: Engineering a Soft Landing 9.1.6 Policy Exercise IV: The Liquidity Trap Revisited 9.2 Tax Inversion, Statutory Taxes, and Effective Taxes: Fifty Foot Walls and 51 Foot Ladders 9.3 The Phillips Curve 9.4 The Yield Curve and the Keynesian Paradigm 9.5 The Agony of a Paradigm Shift: The Great Depression 9.6 Prelude to the Great Depression: The Panics of 1873 and 1893 and the Wizard of Oz 9.7 Discussion Questions Chapter 10: The Supply-Side Model and the New Economy 10.1 The Expectations-Augmented AS Curve: An Explanation of the Paradigm Shift 10.1.1 Diagrammatic Derivation: Expectations-Augmented Aggregate Supply Curve 10.1.2 Paradigm Shift II: An Expectations-Augmented Explanation 10.2 Supply-Side Economics 10.2.1 Significant Income Tax Cuts 10.2.2 Sweeping Corporate/Business Tax Cuts 10.2.3 Increasing Productivity 10.2.4 Supply-Side Stabilization 10.3 Stagflation 10.4 From the Supply-Side to the New Economy 10.5 The Identification Problem 10.6 A Keynesian Explanation of the ``New´´ Economy 10.7 Contrasting the ``New´´ Economy with the ``Old´´ One 10.8 Can the Two Models Be Reconciled? 10.9 The Outlook for the New Economy 10.10 Which Model for Developed Economies? 10.11 Discussion Questions Chapter 11: After COVID: MMT and Other Major Global Macropolicy Issues 11.1 Large Budget Deficits Since 2008: The Dog That Didn´t Bark in the Night 11.1.1 The Super-Huge Global Deficit/GDP Ratios Since 2008 11.2 Modern Monetary Theory (MMT) and Covidonomics 11.3 The Changing Face of Global Oil Prices Chapter 12: Central Banks and Monetary Policy 12.1 Institutional Structure: The Federal Reserve 12.2 The Money Creation Process: How the Federal Reserve Changes the Money Supply 12.2.1 Reserve Requirements and the Money Multiplier: The Theory 12.2.2 Open Market Operations (OMOs) 12.2.3 The ``Broken Rhombus´´ 12.2.3.1 So Why and How Is the Rhombus ``Broken´´? 12.2.4 Reserve Ratios and the Money Multiplier: The Empirical Reality 12.2.5 Changing the Discount Rate 12.2.5.1 How Is Discount Rate Policy Supposed to Change Money Growth? 12.2.5.2 How is Observed (Actual) Discount Rate Policy Different? 12.2.6 Changing the Required Reserve Ratio 12.3 The Role of the Central Bank: How Should Monetary Policy Be Conducted? 12.3.1 Milton Friedman and the Role of Monetary Policy 12.3.2 Is Monetary Discipline Worth the Pain? 12.3.3 The ``Curse´´ of Humphrey-Hawkins 12.3.3.1 Is the Humphrey-Hawkins Act Really a Liability? 12.4 The Taylor Rule 12.5 Exchange Rate Pegging, Currency Crises, and Sterilization 12.6 The Impossible Trinity 12.7 Discussion Questions References Index