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Chapter-1:
What is Macroeconomics?
by Traheka Erdyas Bimanatya, M.Sc.

Macroeconomics | 19 February 2020

Outline
―Welcome to the class!
―What is macroeconomics?
― How to think like a macroeconomist?
 As a scientist
 As an engineer

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PART 1:
WELCOME TO THE
CLASS!
Who will be your lecturers?

Traheka E. Bimanatya, M.Sc.

‒ Graduated from Universitas Gadjah

Mada, Indonesia and University of
Nottingham, the UK.
‒ LPDP Scholarship Awardee: Master
(2016) and Doctoral (2019)
‒ Contact: traheka.erdyas.b@ugm.ac.id

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My backgrounds (Traheka)
‒ Falling in love with economics since in senior high school: won bronze medal in
Olimpiade Sains Nasional 2009.

‒ Recent research experiences:

 Environmental Kuznets Curve for Deforestation in Indonesia, working with World Resource
Institute (WRI) Indonesia.
 The Impact of Extractive Industries on Local Income and Job Creation in Indonesia, working with
Ford Foundation.
 De-bottlenecking of Sugar Industry in Indonesia, working with Asosiasi Pengusaha Indonesia
(APINDO).

‒ Research interests:
International Trade and Finance; Development Macroeconomics; Japanese
Economy.
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During the lectures (and tutorials)
The Dos
 Eating snack or drinking coffee.
(but please mind the others!!)
 Asking questions to me.
(not to your friends)
 Toilet breaks.
The Don’ts
 Making any form of noises!
 Taking picture, videos or audio
recording.
(please ask me for permission)
 Impolite and inappropriate
behaviours.
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Outside the classroom you can …
 Ask me for further discussions related to the lecture topics;
 Receive feedbacks for your exams, assignments and
general performance.
 Share your dreams or stories ^_^

But please don’t …

 Conduct any forms of plagiarism or academic dishonesty.
 Email me at night or weekends.
 Request for exam, quiz or extra assignment make ups.

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More information is in the syllabus.
I have uploaded it in SINTESIS

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PART 2:
WHAT IS
MACROECONOMICS?
To my mind…
Macroeconomics studies glocal economic
issues which have direct or indirect
impacts to different economic actors.

Global economic issues Local economic issues

e.g. Global financial crisis 2008/2009 e.g. land price bubble in Japan in 1980s,
inflation in Papua etc.

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How macroeconomics see The 1980s Japanese Bubble #1

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How macroeconomics see The 1980s Japanese Bubble #2

Based on those data, you can ask the follow up questions such as…

‒ Why did land price bubble appears in the mid-1980s?

‒ Why there were regional variation in land price fluctuation?
‒ How is the impact of bubble to the current economic performance?

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How macroeconomics see The 1980s Japanese Bubble #3

Senior citizen Young people

was getting richer could not buy a house
Property Price
significantly increased

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 You have a lot of options to study macroeconomics in local
perspective… Euro Area
Output: 1.5%
Unemployment: 11.1%
Inflation: 1.1%
Should the common
currency be abandoned?

China
Output: 6.8%
United States Unemployment: 4.1%
Output: 2.5% Inflation: 1.2%
Unemployment: 5.4% Should China release their
Inflation: 0.7% tight political control?
Should the financial market
be strictly regulated?

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As well as in global perspective…

2008 Global Financial Crisis

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Macroeconomics is still evolving

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In the past, we focus on the application of government policy
to the whole economy..

J.M. Keynes (1930s), Milton Friedman (1960s),

The role of active fiscal policy The role of active monetary policy
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But recently, we more focus on studying the behaviour and
interactions of all economic agents …

 Using Dynamic Stochastic

General Equilibrium Model
(DSGE model) a.k.a. micro
founded model.

 Trying to understand the

causes and implications of
economic crisis.

Source: Federal Reserve Bank of New York

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Q & A #1
ANY QUESTIONS UP
TO THIS POINT?
PART 3:
HOW TO THINK LIKE
A
MACROECONOMIST?
There are two types of macroeconomist
As an engineers
 Solving practical problems.
 Have little interest in developing theories.
 Possessing many valuable soft skills.

As a scientist

 Trying to understand how the world works

 Spending much time in formulating theories:
― Analytic tools
― Theoretical principles
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They are often working together…

Providing information and

evaluating theories based on the Providing analytical tools and
real world evidences. theoretical foundations

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… and sharing the common way of thinking.

Using simple economic models to understand the complex world

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What is economic model?
𝑑
 
𝑄 =𝐷(𝑃 , 𝑌 )

Endogenous Variable Exogenous Variables

 Having set of assumptions.

 Proving by empirical data.
 Giving us reliable yet simple explanation of economic phenomena.
.
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Macroeconomics is very much about tying together
facts and theories
(Dornbusch, R. et al, 2014)

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Q & A #2:
ANY QUESTIONS UP
TO THIS POINT?
 THANK YOU
Traheka Erdyas Bimanatya, M.Sc. trahekaerdyas@ugm.ac.id

Traheka Erdyas Bimanatya