Transcription of Macroeconomics: an Introduction
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Macroeconomics: an Introduction
Macroeconomics: an IntroductionJes us Fern andez-VillaverdeUniversity of Pennsylvania1 The Scope of Macroeconomics Microeconomics: Object of interest is a single (or small number of)household orfirm. Macroeconomics: Object of interest is the entire economy. We caremostly about:1. between Macro and Micro Micro and Macro are consistent applications of standard neoclassicaltheory. Unifying theme, EQUILIBRIUM APPROACH:1. Agents optimize given preferences and Agents actions are compatible with each other. This requires:1. Explicit about Models as are the Requirements of Theory? Well articulated models with sharp predictions. Good theory cannot be vague: predictions must be falsifiable. Internal Consistency. Models as measurement should we care about Macroeconomics? Self Interest: macroeconomic aggregates affect our daily life. Cultural Literacy: understanding our world. Common Welfare: Essential for policymakers to do good policy.
2. Measure dollar amount spent on hamburgers. 3. Divide by price of hamburgers in 2004 and multiply by price in 1996. (this equals the number of hamburgers sold in 2004, multiplied by the price of hamburgers in 1996 -the base period). 4. Sum …
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