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ECON 303Intermediate 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 9:30-11am; and by appointment

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Course Objectives

Refresh your command of• Macroeconomic terminology

eco-talk• Macro Facts• Schools of thought

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Course Objectives• Master MODELS

– Demand Side Models AD• Multiplier• IS – LM

– Supply Side Models AS• Wage setting – Price setting• Phillips Curve

– Expectations … in theory and practice– Solow Growth Model

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Variables of

• Output … Real GDP• Unemployment• Inflation … CPI, GDP Deflator

– Time-frames of macroanalysis• Short-run … sticky prices• Medium-run … prices adjust• Long-run … capital accumulates

Variables of Macroeconomics

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Introduction– What’s up … What’s down?

• Unemployment• Oil price … the macro impacts• $ Exchange Rate

» Inflation fears• US trade deficit

–Emerging markets: INDIA, CHINA• Housing bubble

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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

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Macro Pictures: Jobs

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Macro Pictures: Unemployment

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Macro Pictures: Fluctuations

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Macro Pictures: Growth

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Macro Pictures: Core Prices

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Macro Pictures: Budget Deficit

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Macro Pictures: Exchange Rate

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Macro Pictures: Payments Deficit

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Mock FOMC Presentations -- July 1, 2008• 2 – 3 person team Play a Governor of Federal Reserve or President of a District Reserve Bank

Powerpoint-assisted presentation • the state of the national economy

– allude to current economic conditions in districts – focus on the state of the national economy

• recommendation of why, whether and by how much to change the federal funds rate.

• phrasing of the statement to be issued at the end of the mock FOMC meeting.

• Governor of Federal Reserve or President of a District BankFamiliarize yourself with your official’s positions

• recent speeches • minutes of recent FOMC meetings.

• Seek guidance from your professor– appointments will be arranged, the earlier the better.

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MacroeconomicsThe course is divided in three parts: Short -run / Medium-run / Long-run

Short - run: IS / LM ADIS: Y = C + I + G

C = c0 + c1 YD = c0 + c1 (Y - T) I = I0 + b1 Y - b2 i

Y = {spending multiplier} x {autonomous spending}

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}

Medium - run: AD/ASIS/LM ADPS/WS AS

PS: P = (1+ μ)(W/A)WS: W= Pe Ae f(u,z)

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

SRAS and MRAS

When AD or AS shift: MR equilibrium SR equilibrium P new MR equilibrium

Long - run: GrowthSteady 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

Productivity and equilibrium rate of unemployment: Ae = A only in long - run “Natural rate” decreases with unexpected increase in A