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. Civic Responsibility: Essential for us to understand our Brief Overview of the History of macroeconomics I Classics (Smith, Ricardo, Marx) did not have a sharp distinction be-tween micro and macro.
A Brief Overview of the History of Macroeconomics I • Classics (Smith, Ricardo, Marx) did not have a sharp distinction be-tween micro and macro. • Beginning of the XX century: Wicksell, Pigou. • J.M. Keynes, The General Theory of Employment, Interest, and Money (1936). • 1945-1970, heyday of Neoclassical Synthesis: Samuelson, Solow, Klein.
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