Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword or section
Like this
17Activity

Table Of Contents

0 of .
Results for:
No results containing your search query
P. 1
Economics - Macroeconomics

Economics - Macroeconomics

Ratings: (0)|Views: 1,605|Likes:
Published by sushi84

More info:

Published by: sushi84 on Sep 11, 2009
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/25/2012

pdf

text

original

 
EDUCATION AND EXAMINATION COMMITTEEOF THESOCIETY OF ACTUARIESCOURSE 2 STUDY NOTE
MACROECONOMICS
byPaul WachtelCopyright 1997 by the Society of ActuariesThe Education and Examination Committee provides study notes to persons preparingfor the examinations of the Society of Actuaries. They are intended to acquaintcandidates with some of the theoretical and practical considerations involved in thevarious subjects. While varying opinions are presented where appropriate, limits on thelength of the material and other considerations sometimes prevent the inclusion of allpossible opinions. These study notes do not, however, represent any official opinion,interpretations, or endorsement of the Society of Actuaries or its Education andExamination Committee. The Society is grateful to the authors for their contributions inpreparing the study notes.
2-21-00 Printed in U.S.A.FOURTH PRINTING
 
TABLE OF CONTENTS
PREFACE
........................................................................................................................................................................................... i
CHAPTER I—ECONOMIC MEASUREMENT
.....................................................................................................................1 NATIONAL INCOME AND PRODUCT ACCOUNTS.............................................................................................................1Basic Definitions and Concepts.......................................................................................................................................1The Formal Accounts.........................................................................................................................................................2The Savings/Investment Identity.....................................................................................................................................4 Nominal and Real GDP......................................................................................................................................................9Index Number Theory........................................................................................................................................................9Index Numbers and the Measurement of GDP Growth and Inflation.......................................................................11OTHER MAJOR PRICE INDEXES...............................................................................................................................................14Data Sources........................................................................................................................................................................15Data Presentation................................................................................................................................................................16BALANCE OF PAYMENTS...........................................................................................................................................................17BUSINESS CYCLES.........................................................................................................................................................................18Business Cycle Defined.....................................................................................................................................................18Cycle Dating........................................................................................................................................................................19Cycle Indicators..................................................................................................................................................................22INTEREST RATES AND EXCHANGE RATES........................................................................................................................23Interest Rates and the Yield Curve..................................................................................................................................23Exchange Rates...................................................................................................................................................................25
CHAPTER II—GROWTH, PRODUCTIVITY AND LONG-RUN EQUILIBRIUM
...................................................29ANALYZING GROWTH.................................................................................................................................................................31PRODUCTIVITY...............................................................................................................................................................................33Productivity Trends............................................................................................................................................................33Sources of Economic Growth...........................................................................................................................................34How to Increase Productivity Growth.............................................................................................................................36MODEL OF LONG-RUN EQUILIBRIUM...................................................................................................................................38Output Equilibrium.............................................................................................................................................................39SUMMARY.........................................................................................................................................................................................41Distribution of Output and Interest Rates.......................................................................................................................41Money & Prices...................................................................................................................................................................45SUMMARY.........................................................................................................................................................................................48Open Economy Equilibrium Conditions........................................................................................................................48
CHAPTER III—UNDERSTANDING SHORT-RUN FLUCTUATIONS
........................................................................51QUANTITY ADJUSTMENT PARADIGM..................................................................................................................................53THE PLANNED AGGREGATE DEMAND MODEL................................................................................................................55
 
THE SIMPLE KEYNESIAN MULTIPLIER................................................................................................................................57DETERMINANTS OF AGGREGATE DEMAND......................................................................................................................58Consumption........................................................................................................................................................................58Investment............................................................................................................................................................................59Foreign Sector......................................................................................................................................................................60THE KEYNESIAN REAL SECTOR MODEL.............................................................................................................................60Properties of the
 IS 
Curve..................................................................................................................................................62MONETARY SECTOR.....................................................................................................................................................................63Money Demand Function..................................................................................................................................................63Money Market Equilibrium...............................................................................................................................................64Properties of the
 LM 
Curve...............................................................................................................................................65Equilibrium Adjustments..................................................................................................................................................67SUMMARY OF THE
 IS-LM 
MODEL...........................................................................................................................................68
 IS 
Curve................................................................................................................................................................................68
 LM 
Curve..............................................................................................................................................................................68ANALYSIS OF MONETARY AND FISCAL POLICY.............................................................................................................69Fiscal Policy.........................................................................................................................................................................69Monetary Policy..................................................................................................................................................................71Special Cases.......................................................................................................................................................................71THE KEYNESIAN MODEL IN THE OPEN ECONOMY........................................................................................................72Exchange Rates...................................................................................................................................................................72Monetary Policy in an Open Economy...........................................................................................................................73Fiscal Policy in an Open Economy..................................................................................................................................74THE NEXT STEP: BACK TO LONG-RUN EQUILIBRIUM.................................................................................................74
CHAPTER IV—INFLATION AND THE COMPLETE MACROECONOMIC MODEL
.........................................75TOTAL DEMAND AND SUPPLY ANALYSIS.........................................................................................................................75Total Demand Curve..........................................................................................................................................................75Total Supply Curve.............................................................................................................................................................77Keynesian Supply Curve...................................................................................................................................................77Long-run or Classical Supply Curve...............................................................................................................................78Some More Reasons Why Prices are Sticky..................................................................................................................80A DEMAND SHOCK........................................................................................................................................................................82A Policy Expansion: Step by Step..................................................................................................................................82UNDERSTANDING INFLATION MOMENTUM.....................................................................................................................84Price Adjustment Function................................................................................................................................................85Phillips Curve......................................................................................................................................................................85Expectations of Inflation....................................................................................................................................................86Augmented Price Adjustment Equation..........................................................................................................................88Summary...............................................................................................................................................................................92RATIONAL EXPECTATIONS.......................................................................................................................................................92 New Classical Macroeconomics......................................................................................................................................93SOURCES OF INFLATION............................................................................................................................................................94

Activity (17)

You've already reviewed this. Edit your review.
1 hundred reads
1 thousand reads
mylan_Scribd liked this
Rona Pascual liked this
Rona Pascual liked this
as111320034667 liked this
bevelyus5375 liked this
mor0menekse liked this
andronikos liked this

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->