Macroeconomics: Would Its Indicators Help in Your Move to Paradise?
Edition: 1
Copyright: 2019
Pages: 330
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Every country tries to sell self to the outside world brandishing all kinds of prosperity meters showing low-low unemployment rates, low-low inflation/CPI rates, high GDP growth rates, etc. It feels good to have such favorable numbers. But, how can we trust these numbers being pitched? Even if the numbers are as ‘high’ as advertised, are they really meaningful measures of social progress? If not, why then are they still the main attraction? We pry into ways they are measured to verify whether such fears are warranted.
We then delve into the two principal ways through which these very countries respond to unfavorable prosperity numbers. In other words, the executive branch (governments) literally throws money at such problems hoping to create jobs and in so doing reduce unemployment (fiscal policy, we call it). Or, central banks open the money/credit tap for them to get money to eager borrowers with the hope of accomplishing the same goal as the aforementioned (monetary policy, it is called). Put together, these two approaches and their effects interact to determine a third prosperity measure: the value of the currency, the only link to the outside world. At the end of the day it is hoped that you would have an understanding of key macroeconomic (prosperity) issues that you hear in the news every evening, and on your news feeds on your mobile devises.
Preface
Section I: Micro-foundations
Chapter X Worry about diamonds or the building of community centers?
In economics, ruthlessness pays
Social science
Macroeconomic
Making Judgements with numbers
Policy grid
Chapter XI The Emergence of the Modern State and Derivative Macroeconomic Functions
Introduction
Law and order
Legal/moral superstructure
Chapter XII Macroeconomics in pictures
Line graphs
Bar graphs
Combo charts
Scatter chart
Pie chart
Funnel chart
Pareto chart
Section II: Prosperity Tools
Chapter 1. Unemployment
Prosperity tools in pictures: Unemployment rate as a measure of wellbeing
Cost of unemployment
From where the numbers?
A hypothetical
Reasons behind the methodology of (un)employment
Prosperity Indexes
Few Remarks
Policy Grid
Chapter 2. A measure of Inflation
The Semantics
Agencies in Charge of CPI calculation
CPI and Core Inflation
Fact-Checking Grandpa’s story as to whether youngsters have got it so good
Inflation
Sources of Inflation
Measures of Inflation
Relevance of CPI
Policy Grid
Chapter 3. National Output
Introduction
Doing the counting
Real GDP calculation
Real GDP per capita
Potential GDP
Nominal vs. Real GDP
GDP vs GNP. Which one is bigger?
Pitfalls with GDP/GNP as a measure of wellbeing
Enter HDI, Human Development Index
Policy Grid
Chapter 4. Key Indicators
A Country’s 'Value': GDP
Blending supply and demand sides: Broad Measures of Value
What goes into leading indicators: a sample of indicators
Problems with using stock prices as a measure of value
Chapter 5. Economic Growth
Defining Growth
Explaining the Causes of Growth: The Theories
Stylized Facts of Growth
So, what CAUSES growth?
Policy Grid
Section III: Culturally Defining
Chapter 6. Fiscal Policy for what, and for whom?
Introduction
China and India
Codifying Parenting Into Fiscal Policy
Fiscal Policy and related Identities
Canada’s deficit position: 1962-2012
Banks and deficits
The Two Parts to Fiscal Policy
The target, in pictures
The all-encompassing Macro Picture: for one period
The More Human Part to assisting Santa: The Automatic Stabilizer
Multipliers in discretionary fiscal policy: What's up with mega projects?
Deficits and debt
Policy grid
Chapter 7. Monetary Policy
Introduction
Money, more money!
The Interest Rate thrill
The monetary policy show: The Key actors
Permutation of Monetary Actions
Policy Grid
Implications of such deliberate cheap money prices
Chapter 8. Economic shocks and policy responses to them
Introduction: "Underperformance"
What to do to realize our dream landing and fast?
Demand-pull inflation revisited
Cost-push inflation revisited
Policy Grid
Section IV: It all comes down to this: Currency Value
Chapter 9. Currency Value
Normal Exchange rate
Why Cdn1=R10,000 and not Cdn 1=R1?
Exchange rate and its relationship to external account
Real Exchange Rate, Purchasing Power Parity, Law of One Price, or Big Mac Index, Burgernomics
Balance of payments
Debtor vs. creditor countries
Japan a twin deficit country?
Don’t try this at home
Policy Grid
Section V: Making it Happen: where over-spenders get their fix
Chapter 10. Stocks as Value
Introduction: The Making of Wall Street
Types of shares
Go Public, or Stay ‘Family/private’?
Stockmania. The Stock market, a natural?
Going public a natural?
Chapter 11. Bonds as value
Introduction
The bond market: Its size and reach
Financial Instruments
Money-market instruments
Business IOUs
Long-term bond values and associated ‘interest rates’
Types of interest rates (returns/yields)
Other risks with bonds
Ways you can lose your shirt in a bond market
What to do for protection