HON 200C Macroeconomics Instructor: Bernard Malamud –Office: BEH 502 Phone (702) 895 –3294 Fax: 895 – 1354 » Website: Office hours: MW 11:30 -12:30 pm ; 2:30 – 3:30 pm and by appointment

the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back…the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil. John Maynard Keynes, General Theory of Employment, Interest, and Money (1936) In the short-run, it is true, ideas are unimportant and ineffective, but in the long-run they can rule the world. Lionell Robbins, The Great Depression (1934).

Course Objectives Introduce Macroeconomic terminology  eco-talk Macro Facts Schools of thought The economic way of thinking

Course Objectives Master MODELS –Demand Side Models  AD IS – MP Multiplier –Supply Side Models  AS Phillips Curve –Role of Expectations … in theory and in practice –Stabilizing an Unstable Economy Understanding the current crisis –Solow Growth Model

Macro - variables Output … Real GDP … Growth Rate Unemployment Inflation … CPI, GDP Deflator Macro Time Frames Short-run … sticky price Long-run … flex price/markets clear … economic growth … ideas  growth  ideas

The State of Macro…a la Krugman Keynes (1936): Y = C + I + G –Economics of effective demand/Role of uncertainty The “Golden Age” (1946 ~ 1973): Fiscal dominance Monetarist challenge: G crowded out/M-matters-most –Friedman: Avoid monetary mischief “Freshwater” dominance: Rat-X/Efficient Markets –Lucas: confusion  recession –Prescott: supply shocks  intertemporal substitution  recession “Saltwater” acquiescence: Rat-X with frictions –New Keynesian models/Monetarist policies Housing bubble: end of Great Moderation –Behavioral finance/return of Keynes?!?

Macro Facts: Recession! Recession Over?

Macro Facts: Recessions/Depression

Macro Facts: Recession! Recession Over? 9

Macro Facts: Unemployment

Macro Facts: Deflation!?!

Macro Facts: Bank Excess Reserves

Macro Facts: Federal Debt

The Current Debate Stimulus? Fiscal restraint? Lessons from the Great Depression FDR’s Policies: New Deal or Raw Deal?

The $’s Exchange Rate 15

16 Where to Find the Numbers