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.
Composition of GDP - Spending in billion $ in % of GDP Total Nom. GDP 11,004.0 100.0% Consumption 7,760.0 70.5% Durable Goods Nondurable Goods Services
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