Introduction to macroeconomic

theory and policy

1. 2014-2015

de DiosAbesamisArellanoLibre

Textbook and sources

1. Mankiw, N. G. [2012] Macroeconomics. 8. ed. New
York: Worth Publishers.
2. Helpman, E. [2004 ] The mystery of growth.
Cambridge MA: MIT Press.
Lecture notes and other materials (available at the SE
Library reserve section and from the yahoogroup:
https://groups.yahoo.com/neo/groups/econ_imgrossen

Textbook and sources

yahoogroup name : econ_imgrossen

https://groups.yahoo.com/neo/groups/
econ_imgrossen
popular articles in per se pagehttp:/
/www.econ.upd.edu.ph/perse

House rules
Four examinations (60 pts. each) to be held on
weekends.
3.0 = 144 (= 0.6 x 240)
Quizzes, reports, and HW count for extra points in the
numerator.
Two unexcused missed examinations = 5.0
Intellectual dishonesty = 0 credit for the
exam/quiz/homework; repeat offence = 5.0 for the
course plus SDT charges.

1. Introduction
Economics
Macroeconomics versus microeconomics
Big questions in macroeconomics

Economics
(a Greek word)
oikos (= house)+ nomos (= system or management)
rough literal translation: stewardship, or household
management

political economy (an older English term)

stewardship applied to an entire state (polis)
the viewpoint of the sovereign: the whole country regarded
as a household
tax collection and fiscal spending: later matters relating to
population, production, consumption, and trade

Micro- and macroeconomics

Microeconomics: study of the behaviour and
interaction of individual households and
firms, and the behaviour of individual
markets.
Macroeconomics: study of the behaviour of
the economy as a whole; its four main
concerns: (a) level and growth of output; (b)
inflation; (c) employment of labour; and
(d) the national debt

Really just three topics

in macroeconomics
Explaining changes in economic activity
over short periods.
Explaining the sources of long-term
expansion of economies and their
wealth or poverty.
Explaining the possible role of
government in each.

Mankiws version:
What are the reasons for fluctuations in economic
activity (booms and recessions)?
Is there a role for government in stabilising prices and
promoting employment?
How much should government tax, spend, and borrow
to attain its ends and not disrupt the level and
growth of economic activity?
Why are some societies richer or more developed
than others?
Why is the rate of growth of some economies faster
than that of others?

Production and consumption

possibilities
for
a
given
period
Good 2
unattainable
attainable
and efficient
attainable
but inefficient

Good 1

Economic fluctuations and growth

Good 2
Increase in resources
or better technology.

Better employment
of available resources.

Good 1

Real GDP growth 1982-2012

(in percent)
Marcos

C Aquino

Ramos

Estrada

Arroyo

B Aquino

10
8
6
4
2
0
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 07 08 09 10 11 12
-2
-4
-6
-8
-10