HON 200C 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

• the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back…the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil. John Maynard Keynes, General Theory of Employment, Interest, and Money (1936)

• In the short-run, it is true, ideas are unimportant and ineffective, but in the long-run they can rule the world.Lionell Robbins, The Great Depression (1934).

Course Objectives

Introduce• Macroeconomic terminology

eco-talk• Macro Facts• Schools of thought• The economic way of thinking

Course Objectives• Master MODELS

– Demand Side Models AD• IS – MP

• Multiplier– Supply Side Models AS

• Phillips Curve– Role of Expectations … in theory and in practice– Stabilizing an Unstable Economy

• Understanding the current crisis– Solow Growth Model

Macro - variables• Output … Real GDP … Growth Rate• Unemployment• Inflation … CPI, GDP Deflator

Macro Time Frames• Short-run … sticky price• Long-run … flex price/markets clear

… economic growth

… ideas growth ideas

The State of Macro…a la Krugman

Keynes (1936): Y = C + I + G– Economics of effective demand/Role of uncertainty

The “Golden Age” (1946 ~ 1973): Fiscal dominance

Monetarist challenge: G crowded out/M-matters-most– Friedman: Avoid monetary mischief

“Freshwater” dominance: Rat-X/Efficient Markets– Lucas: confusion recession– Prescott: supply shocks intertemporal substitution

recession

“Saltwater” acquiescence: Rat-X with frictions– New Keynesian models/Monetarist policies

Housing bubble: end of Great Moderation– Behavioral finance/return of Keynes?!?

Macro Facts: Recession! Recession Over?

Macro Facts: Recessions/Depression

Macro Facts: Recession! Recession Over?

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Macro Facts: Unemployment

Macro Facts: Deflation!?!

Macro Facts: Bank Excess Reserves

Macro Facts: Federal Debt

The Current Debate

Stimulus?

Fiscal restraint?

Lessons from the Great Depression

• FDR’s Policies: New Deal or Raw Deal?

The $’s Exchange Rate

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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