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Salvador, Brazil
Salvador, Brazil

The Economy 2.0 Macroeconomics

Table of contents — Macroeconomics

  1. Preface
  2. How to cite The Economy 2.0
  3. A note to instructors
  4. Authorship and production
  5. List of features
  6. Introduction to mathematical extensions
  7. Glossary
  8. 1—The supply side of the macroeconomy: Unemployment and real wages
    1. 1.1 Family fortunes: Jobs, wages, and the global macroeconomy
    2. 1.2 The economy as a whole
    3. 1.3 Measuring the macroeconomy: Output, employment, unemployment, and inactivity
    4. 1.4 Measuring the macroeconomy: Nominal wages, prices, and real wages
    5. 1.5 The supply side of the macroeconomy
    6. 1.6 Wage setting and unemployment (WS curve)
    7. 1.7 The price-setting real wage (PS curve)
    8. 1.8 Equilibrium and disequilibrium in the WS–PS model
    9. 1.9 Studying the economy as a whole: Macroeconomics
    10. 1.10 Summary
    11. 1.11 References
  9. 2—Unemployment, wages, and inequality: Supply-side policies and institutions
    1. 2.1 A scarred generation
    2. 2.2 Measuring the economy: Inequality
    3. 2.3 Unemployment and inequality: WS–PS model and Lorenz curve
    4. 2.4 Labour market policies to address structural unemployment and inequality
    5. 2.5 Labour unions
    6. 2.6 Segmented labour markets
    7. 2.7 Taxes and the WS–PS model
    8. 2.8 Imported materials and the WS–PS model
    9. 2.9 Application: Did a decline in competition increase inequality in the US?
    10. 2.10 Application: Employment security and labour market flexibility in Denmark
    11. 2.11 Successes and failures: Germany and Spain
    12. 2.12 How good is the model?
    13. 2.13 Summary
    14. 2.14 References
  10. 3—Aggregate demand and the multiplier model
    1. 3.1 The ‘great recession’: Hardship at home and at work
    2. 3.2 Measuring the aggregate economy: Gross domestic product
    3. 3.3 GDP as expenditure: The components of GDP
    4. 3.4 Interpreting GDP
    5. 3.5 Growth and fluctuations
    6. 3.6 Introducing the multiplier model
    7. 3.7 The multiplier model: Aggregate demand shocks cause business cycle fluctuations
    8. 3.8 The multiplier model: Including the government and net exports
    9. 3.9 Why is consumption relatively smooth?
    10. 3.10 Shocks to households and the limits to smoothing consumption
    11. 3.11 Why is investment volatile?
    12. 3.12 Investment spending in the multiplier model
    13. 3.13 Application: China’s post-COVID-19 aggregate demand problem
    14. 3.14 Summary
    15. 3.15 References
  11. 4—Inflation and unemployment
    1. 4.1 Cost of living crisis
    2. 4.2 Measuring the economy: Inflation
    3. 4.3 What’s wrong with inflation?
    4. 4.4 Inflation, unemployment, and conflicting claims on output
    5. 4.5 Modelling the relationship between inflation and unemployment
    6. 4.6 Expected inflation shifts the Phillips curve
    7. 4.7 The business cycle model: Aggregate demand, the supply side, and inflation
    8. 4.8 The business cycle model: Demand and supply shocks, and inflation expectations
    9. 4.9 Global oil and other commodity price shocks
    10. 4.10 A review of causes of inflation
    11. 4.11 Application: The return of inflation after the pandemic
    12. 4.12 Summary
    13. 4.13 References
  12. 5—Macroeconomic policy: Inflation and unemployment
    1. 5.1 ‘It’s the economy, stupid’: Government popularity, inflation, and unemployment
    2. 5.2 The role of government: Introducing fiscal and monetary policy
    3. 5.3 Fiscal and monetary policy responses to demand shocks
    4. 5.4 The division of labour between fiscal and monetary policymakers
    5. 5.5 A negative (inflationary) supply shock and the monetary policy dilemma
    6. 5.6 Fiscal policy: How governments can dampen fluctuations
    7. 5.7 The size of the multiplier and the impact of fiscal policy
    8. 5.8 Government austerity policy and the paradox of thrift
    9. 5.9 Monetary policy and inflation targeting
    10. 5.10 Monetary policy and anchored inflation expectations
    11. 5.11 Application: Inflation and the monetary policy response to the Russia–Ukraine war
    12. 5.12 Current costs and future benefits: Understanding investment and asset prices
    13. 5.13 Transmission of monetary policy decisions to inflation: Domestic channels
    14. 5.14 Monetary policy and the exchange rate
    15. 5.15 Application: Policy responses to supply shocks—case study of the UK 1950–2023
    16. 5.16 Summary
    17. 5.17 References
  13. 6—The financial sector: Debt, money, and financial markets
    1. 6.1 How do you live if you don’t work?
    2. 6.2 Bilateral debt: Marco and Julia
    3. 6.3 Debt and the financial sector: Financial intermediaries and financial markets
    4. 6.4 Introducing a bank
    5. 6.5 Introducing money
    6. 6.6 Introducing the central bank
    7. 6.7 Who really signs the banknotes? The central bank’s balance sheet and the government
    8. 6.8 Money creation in a modern economy
    9. 6.9 Introducing financial markets
    10. 6.10 Businesses: Capital and the magic (and risks) of leverage
    11. 6.11 Household investments: Housing and financial assets
    12. 6.12 The financial sector: A summary and overview
    13. 6.13 Summary
    14. 6.14 References
  14. 7—Macroeconomic policy in the global economy
    1. 7.1 Chainsaws, government spending, and inflation
    2. 7.2 Exchange rate regimes, monetary policy, and inflation
    3. 7.3 A flexible exchange rate regime with no stable inflation target (FlexNIT)
    4. 7.4 The ultimate Fix economy: A country within a common currency area
    5. 7.5 Exchange rate and monetary regimes: The story so far
    6. 7.6 Fixed and flexible exchange rate regimes in practice around the world
    7. 7.7 Exchange rate regimes and inflation outcomes in the world
    8. 7.8 Global financial markets and policy interest rates
    9. 7.9 Implications of global capital mobility for interest rates in different monetary exchange rate regimes
    10. 7.10 Why do some countries still end up with high and volatile inflation?
    11. 7.11 Application: Quality of governance and inflation
    12. 7.12 Summary
    13. 7.13 References
  15. 8—Economic dynamics: Financial and environmental crises
    1. 8.1 Collapse of Lehman Brothers 2008–2009
    2. 8.2 Tipping points, instability, and lock-in
    3. 8.3 Application: A real-world poverty trap
    4. 8.4 Assets and price bubbles
    5. 8.5 Modelling a house price bubble and collapse
    6. 8.6 Structural changes in the housing market and shifts of the S-shaped PDC
    7. 8.7 Housing booms and busts: Household borrowing, bank lending, and aggregate consumption
    8. 8.8 Application: Inequality and the US housing boom and bust
    9. 8.9 Leverage and interconnection: The vulnerabilities of banks
    10. 8.10 Addressing instability of the financial system
    11. 8.11 A model of environmental collapse: The disappearance of Arctic sea ice
    12. 8.12 Prudential policies to address fundamental uncertainty about environmental tipping points
    13. 8.13 Destabilizing a carbon trap to promote green technologies
    14. 8.14 Summary
    15. 8.15 References
  16. 9—Uneven development on a global scale
    1. 9.1 The transformation of China’s economy and living standards
    2. 9.2 Measuring economic growth: Ratio scales and growth rates
    3. 9.3 Capital goods and technology
    4. 9.4 How much does capital accumulation contribute to the growth rate of living standards?
    5. 9.5 Investment and saving
    6. 9.6 Barriers to growth
    7. 9.7 Institutions (rules of the game) and catching up
    8. 9.8 How poor countries get stuck at low growth and how they can grow rapidly
    9. 9.9 Growth transitions
    10. 9.10 Application: Growth in Bangladesh and Pakistan
    11. 9.11 Catch-up growth: A less unequal world
    12. 9.12 Planetary limits and sustainable growth
    13. 9.13 Summary
    14. 9.14 References
  17. 10—Government as economic actor: Economics, politics, and public policy
    1. 10.1 Women’s right to vote and the reduction in child mortality in the United States
    2. 10.2 Government as an economic actor
    3. 10.3 Democracy as a political institution
    4. 10.4 Political preferences and electoral competition: The median voter model
    5. 10.5 The advance of democracy and its stalling
    6. 10.6 Democracy makes a difference
    7. 10.7 Modelling a self-interested political elite: Rent-seeking
    8. 10.8 Scope for political rent-seeking under different political systems
    9. 10.9 How political competition affects government policy
    10. 10.10 The parallels between political and economic competition
    11. 10.11 The persistence of unfairness and market failures in democracies: Why governments fail
    12. 10.12 Economic infeasibility
    13. 10.13 Citizens and elected leaders as principals and agents
    14. 10.14 Policy matters and economics works: Government success
    15. 10.15 Afterword
    16. 10.16 Summary
    17. 10.17 References
  18. Looking forward to economics after The Economy 2.0
  19. Bibliography