Macroeconomics, Global Edition

Frederic S. Mishkin  
Total pages
May 2014
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Macroeconomics, Global Edition
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For courses in Intermediate Macroeconomics

Help students understand macroeconomics in theory as well as practice

Macroeconomics: Policy and Practice, Second Edition draws on the rich tapestry of recent economic events to help students understand the policy issues debated by the media and the public at large during these trying times. Building on his expertise in macroeconomic policy making at the Federal Reserve, author Frederic S. Mishkin provides detailed, step-by-step explanations of all models and highlights the techniques used by policy makers in practice. The Second Edition incorporates a wealth of new and updated content, as well as new tools and resources in MyEconLab that bring course material to life.

This text provides a better teaching and learning experience–for you and your students. It will help you to:
Personalize learning with MyEconLab: This online homework, tutorial, and assessment program engages students in learning and provides instructors tools to keep students on track.
Enable students to connect theory to practice: An aggregate demand and supply model helps students understand theory, while numerous examples help them understand the applications of theory.
Foster interest via engaging features and updated content: Updates that reflect the latest happenings in the world of economics and student-friendly in-text tools capture student interest.
Teach your course your way: A flexible structure allows instructors to focus on the particular areas of macroeconomics that match their course goals.

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New to this Edition

Enable students to connect theory to practice

NEW! Substantial additional material on business cycle analysis
makes it easier for students to understand the dynamic aggregate demand/aggregate demand model.
• A new section on alternative view of the business cycle in Chapter 8 distinguishes the long-run trend from deviations from this trend and introduces the concept of the output gap
• Coverage of financial frictions has been integrated into the dynamic aggregate demand and aggregate supply model at the outset, and financial frictions are treated as an additional factor that shifts the IS curve (in Chapter 10) and as a factor that shifts the AD curve (in Chapter 12)
• A new section clarifies the difference between movements along the MP curve from shifts in the MP curve.
Foster interest via engaging features and updated content

NEW! The Second Edition reflects the recent explosion of research on economic growth as economists attempt to address the question of why some countries stay poor, while others prosper. A new introductory section in Chapter 6 discusses economic growth around the world. Chapter 6 has also been updated to include new figures that show how output per worker changes over time when there is a change in the saving rate, population growth, or technology.

NEW! Coverage of non-conventional monetary policy and the zero lower bound helps students understand current issues in macroeconomics. In recent years, monetary policymakers have entered a brave new world in which they have had to resort to nonconventional monetary policy because the policy interest rate—the federal funds rate in the United States—has hit a floor of zero (the so-called “zero lower bound”). The policy rate cannot be driven lower, thus making conventional monetary policy infeasible. Nonconventional monetary policy at the zero lower bound, such as quantitative easing, has become very controversial and is quite interesting to students. The Second Edition contains extensive discussion of this topic, with the following new material:
• A new application, “Quantitative Easing and the Money Supply, 2007–2013” (Chapter 5)
• A new section on monetary policy at the zero lower bound, which uses the dynamic aggregate demand and aggregate supply model to explain how the zero lower bound affects the conduct of monetary policy (Chapter 13)
• A new Policy and Practice case, “Abenomics and the Shift in Japanese Monetary Policy in 2013” (Chapter 13)
• A new Policy and Practice case, “Nonconventional Monetary Policy and Quantitative Easing During the Global Financial Crisis” (Chapter 15)
• A new section on fiscal multipliers at the zero lower bound, which explains why fiscal multipliers are likely to be larger at the zero lower bound (Chapter 16)
• A new section on nominal GDP targeting (Chapter 21)
NEW! The Second Edition includes new material on the Euro Crisis, a continuing drama since 2010 and a key contemporary topic.
• A new section in Chapter 16 explains the dynamics of these sovereign debt crises.
• Three new Policy and Practice cases in Chapters 16 and 17—entitled “The European Sovereign Debt Crisis,” “The Debate Over Fiscal Austerity in Europe,” and “Will the Euro Survive?”—explore the impact of specific policies on the debt crises in the European Union.


Table of Contents

I. Introduction
1. The Policy and Practice of Macroeconomics    
2. Measuring Macroeconomic Data    

II. Macroeconomic Basics    
3. Aggregate Production and Productivity    
4. Saving and Investment in Closed and Open Economies    
5. Money and Inflation    

III. Long-Run Economic Growth    
6. The Sources of Growth and the Solow Model    
7. Drivers of Growth: Technology, Policy, and Institutions    

IV. Business Cycles: The Short Run    
8. Business Cycles: An Introduction    
9. The IS Curve    
10. Monetary Policy and Aggregate Demand    
11. Aggregate Supply and the Phillips Curve    
12. The Aggregate Demand and Supply Model    
13. Macroeconomic Policy and Aggregate Demand and Supply Analysis    

V. Finance and the Macroeconomy    
14. The Financial System and Economic Growth    
15. Financial Crises and the Economy    

VI. Macroeconomic Policy    
16. Fiscal Policy and the Governmnt Budget    
17. Exchange Rates and International Economic Policy    

VII. Microeconomic Foundations of Macroeconomics    
18. Consumption and Saving    
19. Investment    
20. The Labor Market, Employment, and Unemployment    

VIII. Modern Business Cycle Analysis and Macroeconomic Policy    
21. The Role of Expectations in Macroeconomic Policy
22. Modern Business Cycle Theory