Detailed Outline of the Course
On Reading and Learning
This is a tough course, but you can learn a lot if you study smart as well as hard.
The Most Effective Memory Methods are Difficult—and That's Why They Work (VIDEO HERE) 1/22
There's One Key Difference Between Kids Who Excel at Math and Those Who Don't 1/22
Growth Rates and Percentage Changes Using Logarithms
Macoeconomists use logarithms all the time because they make it easier to understand things quantitatively. Talking about percent changes without using logarithms is a pale shadow of talking about percent changes with logarithms.
The Logarithmic Harmony of Percent Changes and Growth Rates (VIDEO HERE) 1/24
The Shape of Production: Charles Cobb's and Paul Douglas's Boon to Economics 1/24
Growth Rates and the Rule of 70 (.doc download)
Chapter 1—The Science of Macroeconomics
What happens in the long run is very different from what happens in the short run.
Measuring Learning Outcomes from Getting an Economics Degree 1/24
On MV=PY: “Optimal Monetary Policy: Could the Next Big Idea Come from the Blogosphere?” 1/31
Chapter 2—The Data of Macroeconomics
What happens with things that are a big share of people’s budgets, such as housing, matters a lot for economic welfare.
Justin Wolfers: More Women Than Men Are Going to College. That May Change the Economy
Comparing the Economic Effects of the Pandemic in the US and the Eurozone
Chapter 3—National Income: Where It Comes From and Where It Goes
In the long run, extra government purchases comes at the expense of consumption or investment (or net exports in an open economy). Also, in the long run, increasing government transfers or cutting taxes leads to extra consumption that crowds out investment or government purchases. Finally, efforts to avoid taxes (which are often exacerbated by unfortunate ways in which real-world taxes are designed) can cause people to make decisions that are often not in the national interest. Hence, we should think carefully about government purchases, government transfers and how the government raises revenue.
Yes, There is an Alternative to Austerity vs. Spending: Reinvigorate America's Nonprofits 2/26
How and Why to Expand the Nonprofit Sector as a Partial Alternative to Government: A Reader’s Guide (You only need to read the part that is above the title “Core Argument.” The part after that is mostly a bibliography.) 2/26
Imperfect Competition and Increasing Returns to Scale as Foundations of Macroeconomics
Sticky prices don’t make sense without imperfect competition, and imperfect competition doesn’t make sense without increasing returns to scale. Hence, imperfection competition and increasing returns are central to macroeconomics. They are true of very large chunks of the real world.
Returns to Scale and Imperfect Competition in Market Equilibrium 2/23
REVISED: Increasing Returns to Scale and Imperfect Competition slides
Chapter 4—The Monetary System: What It Is and How It Works
The Fed is moving to a system where the nominal interest rate in the economy is essentially determined by the interest rate on reserves. The smooth running of this system requires the Fed to keep the monetary base quite large.
Monetary Policy
The Fed and other central banks have the power to choose the level of aggregate demand. They should use this power to choose aggregate demand at a level that keeps inflation steady—the “natural” or “neutral” level of output and employment (and unemployment).
Chapter 5—Inflation: Its Causes, Effects and Social Costs
Inflation has important costs. Some of the most important costs of inflation are cognitive costs. The costs of inflation can be lowered by reducing inflation, but reducing inflation safely requires a willingness to use negative interest rates.
Chapter 6—The Open Economy
Net exports—also called the balance of trade or the the trade surplus/trade deficit—is determined by international capital flows—the international flow of funds for portfolio investment.
Chapter 7—Unemployment and the Labor Market
Output and employment are below their frictionless optimum because of three “wedges”: (1) imperfect competition, which puts price above marginal cost; (2) marginal tax rates, which put the amount a firm pays workers above what the workers receive in their paycheck, and (3) labor market distortions that for many people put the amount they would receive in their paycheck if they could get a job above the value of their leisure time.
Chapter 10—Introduction to Economic Fluctuations
Different dimensions of macroeconomic policy to affect aggregate demand are substitutes, so whatever the other dimensions of macroeconomic policy, monetary policy can choose the level of aggregate demand. (This may sometimes require negative interest rates.) It is important to get the level of aggregate demand right: if aggregate demand is too high, it will cause a boom that leads to inflation; if aggregate demand is too low, it will cause a recession.
Chapter 8—Economic Growth I: Capital Accumulation and Population Growth
In the long run (in this case, over the course of decades), saving supports investment that can have a big effect on the level of consumption an economy can deliver.
Chapter 9—Economic Growth II: Technology, Empirics and Policy
Technology—thought of broadly as anything that helps produce a large amount of output from a small amount of input—is the Big Kahuna of economic growth once a government is governing an economy reasonably well. However, it is also possible for economies—or parts of economies—to govern an economy so badly that it gets in the way of economic growth. In the area of technology, for many countries, the key is copying technology developed elsewhere. For the US, the key is developing new technology.
One of the Biggest Threats to America's Future Has the Easiest Fix
Restoring American Growth: The Video (Please watch the whole thing by 4/27/18—you need this material to tackle a question on the practice exam. Watching this video counts as a makeup class.)
Negative Interest Rate Policy
Positive interest rates are when a borrower pays a lender for the privilege of using funds. Negative interest rates are when a lender pays a borrower to store funds. Negative nominal interest rates are important for enabling monetary policy to do its job of keeping the economy at the natural level of output and employment. Several central banks have begun using negative interest rates. Deeper negative rates are possible if a central bank is careful to deal with the bank profits problem and the paper currency problem. Central banks worry about political flak from using negative interest rates.
How Subordinating Paper Currency to Electronic Money Can End Recessions and End Inflation
Wonkblog Interview by Dylan Matthews: Can We Get Rid of Inflation and Recessions Forever?
Gather ’round, Children, Here’s How to Heal a Wounded Economy
Monetary vs. Fiscal Policy: Expansionary Monetary Policy Does Not Raise the Budget Deficit
How and Why to Avoid Mixing Monetary Policy and Fiscal Policy
Alexander Trentin Interviews Miles Kimball on Next Generation Monetary Policy
Optional: The pictures and videos in the aggregator post "How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide" may help you.