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ECON 303 Intermediate Macroeconomics Instructor : Bernard Malamud Office: BEH 502

ECON 303 Intermediate Macroeconomics Instructor : Bernard Malamud Office: BEH 502 Phone (702) 895 –3294 Fax: 895 – 1354 Email: bernard.malamud@unlv.edu Website: www.unlv.edu/faculty/bmalamud Office hours: MTWThF 11:30 am – 12:30 pm a nd by appointment. Course Objectives.

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ECON 303 Intermediate Macroeconomics Instructor : Bernard Malamud Office: BEH 502

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  1. ECON 303 Intermediate Macroeconomics • Instructor: Bernard Malamud • Office: BEH 502 • Phone (702) 895 –3294 • Fax: 895 – 1354 • Email: bernard.malamud@unlv.edu • Website: www.unlv.edu/faculty/bmalamud • Office hours: MTWThF 11:30 am – 12:30 pm • and by appointment

  2. Course Objectives Refresh your command of • Macroeconomic terminology  eco-talk • Macro Facts • Schools of thought

  3. Course Objectives • Master MODELS • Demand Side Models  AD • Multiplier • IS – LM • Supply Side Models  AS • Wage setting – Price setting • Phillips Curve • Role of Expectations … in theory and in practice • Stabilizing an Unstable Economy • Understanding the current crisis • Revolution and evolution in macro-thought • Solow GrowthModel

  4. Macro - variables • Output … Real GDP … Growth Rate • Unemployment • Inflation … CPI, GDP Deflator Macro Time Frames • Short-run … sticky price • Medium-run … price adjusts • Long-run … economic growth

  5. The State of Macro…a la Krugman Keynes (1936): Y = C + I + G • Economics of effective demand 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 the “Great Moderation” • Behavioral finance/return of Keynes?

  6. Macro Facts: Recession! Recession Over?

  7. Macro Facts: Recessions/Depression

  8. Macro Facts: Unemployment

  9. Macro Facts: Deflation!?!

  10. Macro Facts: Federal Debt

  11. Americans Do Debt Household mortgages Federal Gov’t Business debt Total Debt Non-Financial Sectors Consumer credit

  12. Macro Facts: Bank Excess Reserves

  13. Macro Facts: Trade Deficit, Goods & Services Imports Exports

  14. Major currencies/$ Broad basket of currencies/$

  15. Where to Find the Numbers • http://research.stlouisfed.org/fred2/ • www.bls.gov/data/ • www.economist.com • www.bea.doc.gov • http://www.gpoaccess.gov/eop/ • www.oecd.org

  16. Macroeconomics The course is divided in three parts: Short -run / Medium-run / Long-run Short – run (sticky price): IS / LM  AD LM: (M/P)d = (M/P)s (M/P)d = L(Y,i) Ms = [1/(c + r(1-c))]H = {money multiplier} x {monetary base} IS:Y = C + I + G C = c0 + c1 YD = c0 + c1 (Y - T) I = I0 + b1 Y - b2 i  Y = {spending multiplier} x {autonomous spending} Medium – run (flexible price): AD/AS IS/LM  AD PS/WS  AS PS: P = (1+ μ)(W/A) WS: W= Pe Ae f(u,z)  SRAS and MRAS • In medium - run, Pe = P  (W/P)WS = (W/P)PS = A / (1+ μ) • Natural/Structural/Equilibrium Rate of Unemployment (un ) • “Full - employment” rate of output (YFE)The Green Shaft When AD or AS shift: MR equilibrium  SR equilibrium P  new MR equilibrium Productivity and equilibrium rate of unemployment: Ae = A only in long - run  “Natural rate” decreases with unexpected increase in A Long – run (factor supplies change): Growth Steady state: s(Y/AN) = (δ + gN + gA )(K/AN) For simple Cobb-Douglas function: Y = Kα (AN)1-α Y/AN = {s/((δ + gN + gA )}α/(1-α) Golden - rule saving rate = α

  17. Americans Do Debt Household mortgages Federal Gov’t Business debt Consumer credit

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