Pages: 192

Trade Paper: ISBN 97888885486133; $37.95

Pdf: ISBN 9788885486140; $19,99

Author: Luigi Balletta, Salvatore Modica

### Table of Contents

**1. GDP, Prices, Inflation, Interest**

1.1 National Accounting

1.2 Prices, quantities, time and rates

1.2.1 Price indices and Inflation

1.2.2 Exchange and goods available at different times

1.2.3 Rates of interest

1.3 Two more elaborate examples

1.4 The case *Y **= **G*

1.5 Beyond GDP?

1.6 Exercises

**2. Economic Growth: the Solow Model**

2.1 Introduction

2.1.1 Growth rate in continuous time

2.1.2 Growth over millennia, and the world today

2.1.3 The logarithmic scale

2.2 The Solow growth model

2.2.1 Dynamics and stationary state

2.2.2 Catching up

2.2.3 The role of parameters *s* and *n*

2.2.4 Consumption in stationary state: The Golden Rule of capital accumulation

2.2.5 Economic policy

2.2.6 Income distribution and Cobb-Douglas function

2.2.7 Technological progress and growth in stationary state

2.2.8 Economic policy and data

2.2.9 Estimating technological progress: the Solow residual

2.2.10 Prices and markets

2.3 What would come next: endogenous growth

2.4 Exercises

**3. From Solow to the ***IS*** ****curve**

3.1 From the long run to the short run

3.2 The change of perspective

3.3 Savings and Investments: the *IS* curve

3.4 The paradox of saving

3.5 Effective Demand

3.6 Shifts of the *IS* curve

3.7 Exercises

**4. The economy with flexible prices**

4.1 Introduction

4.2 The model and equilibrium with flexible prices

4.2.1 Labour market and equilibrium production

4.2.2 The market of loanable funds

4.2.3 Money and the price level

4.2.4 General equilibrium

4.3 Economic analysis of the model

4.3.1 Effects of a contraction in the consumption function

4.3.2 Countercyclical policy: variation of *G* and *M*

4.3.3 Supply shock

4.4 Money supply and financial intermediation

4.5 Exercises

**5. The point of view of JM Keynes**

5.1 Alternative solution of the model

5.1.1 The loanable funds market: *I **= **S*

5.1.2 The liquidity market: *L **= **M*

5.1.3 *IS-LM* equilibrium

5.1.4 Back to general equilibrium

5.2 Introduction to Keynesian analysis

5.2.1 Adjustments and the role of economic policy

5.2.2 Supply in the short run

5.2.3 “Aggregate demand” as function of *P*

5.2.4 Next step

5.3 Exercises

**6. ****IS-LM ****equilibrium with linear functions**

6.1 Equilibrium computation

6.2 Dependence of equilibrium on *G *and *M*

6.3 Effectiveness of fiscal and monetary policy

6.3.1 The public expenditure multiplier

6.3.2 Investments sensitive to *r*

6.3.3 Liquidity demand sensitive to *r*: Liquidity Trap

6.4 Exercises

**7. Equilibrium and adjustments**

7.1 Introduction: vertical *AS*, horizontal *AS*

7.1.1 *AD* shifts with the *IS* and *LM* curves

7.1.2 *AD* contracts. What happens? Two different answers from two different models

7.2 *IS-LM *equilibrium, recap of transitions

7.2.1 The *IS* curve shifts

7.2.2 The *LM* curve shifts

7.3 Convergence to general equilibrium

7.3.1 *IS* contraction

7.3.2 *LM* contraction

7.4 Government and the Central Bank

7.4.1 Cooperation

7.4.2 Conflict

7.4.3 Divergence of opinion

7.4.4 “I can’t do more”

7.5 Interest rate target: the *IS-MP* model

7.6 Exercises

**8. Labour market and price expectations: ***AS-AD*** ****analysis**

8.1 Introduction

8.2 Labour market

8.2.1 labour supply: wages and price expectations

8.2.2 The firm: price making and labour demand

8.2.3 Labour market equilibrium

8.2.4 Looking ahead: general equilibrium

8.3 The *AS* curve

8.4 Stable general equilibrium: *P*^{e}* **= **P*^{eq}

8.5 Temporary general equilibrium: *P*^{e}* **≠** **P*^{eq}

8.6 Transitions between equilibria

8.6.1 Rational expectations

8.6.2 Adaptive expectations

8.7 Comparison with fixed price adjustment

8.8 Interest rate targets of the Central Bank

8.9 AS shock and structural policies

8.10 Inflation, Phillips curve and Taylor rule

8.10.1 Inflation expectations, *AS* and the Phillips curve

8.10.2 IS-LM, central bank and the Taylor rule

8.10.3 Equilibrium

8.10.4 Zero lower bound and quantitative easing

8.11 Exercises

**9. Public expenditure and intertemporal choice**

9.1 Introduction

9.2 The model

9.2.1 The consumer

9.2.2 The firm

9.2.3 The government

9.3 Equilibrium in the current period

9.3.1 Labour market

9.3.2 Goods (or funds) market

9.3.3 *IS-LL* equilibrium

9.4 Equilibrium as *G* varies

9.4.1 Markets

9.4.2 How equilibrium changes if *G* goes up

9.4.3 What we learned from the intertemporal model

9.5 Intertemporal equilibrium: complete example

9.5.1 The firm

9.5.2 The consumer

9.5.3 Funds market and Walras' Law

9.5.4 Equilibrium

9.5.5 Solution of the system (Python file)

9.6 Exercises