Economics 3080, "Intermediate Macroeconomics", Spring 2026 — Confessions of a Supply-Side Liberal

Miles Kimball’s Economics 3080

· This section emphasizes 21st-Century Macroeconomics within the broad sweep of history, past and future. In particular, It emphasizes the latest thinking in monetary policy (including monetary dominance, negative interest rate policy and the current floor system of the Fed), and touches on the transition from a Malthusian equilibrium pre-1870 to sustained economic growth since then, and discussion about the coming transformation of the economy due to AI, cheap solar energy, and biomedical advances.

· The blind spot of economics in understanding the effects of human cognitive limitations is highlighted.

· The focus is on understanding the real world rather than on theories. Nevertheless, three key theories are crucial for understanding the world: (1) the supply-driven long-run model (which can be extended to consider the endogenous determination of labor, capital and technology), (2) the theory of international finance (applied to both the short run and the long run) in which the US trade deficit is the mirror image of net foreign investment into the United States, and (3) the grounding of macroeconomics on imperfect competition and increasing returns to scale with fixed costs and constant marginal costs.

· The perspective taken on monetary policy makes it possible to dramatically simplify treatment of the short-run: by choosing the interest rate, the Fed (or other central bank) can determine short-run output. When output is above its natural level, inflation rises; when output is below the natural level, inflation falls. That perspective helps in focusing on the key real-world issues.

· To make real-world understanding quantitative, this section takes a logarithmic approach to percent changes. Substantial time is spent discussing economic trends (such as the transition of the primary sector of the economy from agriculture to manufacturing to services) and facts about the economy.

· Attendance in class is required, with an automatic fail if you miss more than 7 classes. There are no makeup exams.

· The most unusual feature of this section is the extensive use of songs about macroeconomics (generated with the help of AI) to emphasize key takeaways.