MACROECONOMICS

2006-08-23T17:25:00.000-07:00

SCOPES OF MACROECONOMICS

Macroeconomics considers the performance of the economy as a whole. It is possible to define this subject as the study of behaviour for economic aggregates and index such as:

- Gross National Product or GNP.

- National Accounts as expenditures in consume and investment,

- Savings, national debts, public déficit etc.

- Inflation or prices behaviour.

- Interest Rate.

- Exchange Rate.

- Employment and unemployment rates.

- Balance of Payments and so on.

When we study macroeconomics we are looking at topics such as economic growth; inflation; changes in employment and unemployment, our trade performance with other countries (i.e. the balance of payments) the relative success or failure of Government Economic Policies and the decisions made by the Central Banks in the Countries.

There exist some subfields to specific concerns to Macroeconomics, such as:

- Economic Growth.

- Economic Development.

- Welfare and Poverty Satus.

- International Trade and so on.

Short entries:

- Economic Growth: This is the study of trends in national output and living standards.

- Unemployment: Study the reasons for the changing structure of the work force.

- Inflation: Analize the prices evolution, who loses and who gains with inflation.

- International trade: Study the flows of goods and money in the international trading markets.

- Interest rates: Respond How do changes in interest rates affect consumers and businesses.

Objectives of Government: Economic PolicyGovernment management of the economy is always a key political issue, not least at election time, when the government must defend its economic record over the previous years.

Each government must set targets and objectives when it assumes power, and often, economic objectives lie right at the heart of a government's overall strategy.

The Labour Government has several current objectives, and scopes of economic policy, for example: Stable low inflation with prices rising at a rate within the target range of 1.5% - 2.5% per year; Sustainable growth as measured by the rate of growth of real Gross Domestic Product; Higher levels of investment and productivity; To improve international competitiveness; High employment, it means that the government wants to achieve full-employment rates; Rising living standards and a fall in relative poverty;

Sound government finances (including control over government borrowing and the national debt).

The key point is that Government through its economic policies, aims to improve the economic welfare of the country as a whole.

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2006-08-15T17:11:00.000-07:00

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2006-07-28T19:21:00.000-07:00

ORIGINS OF MACROECONOMICS

Until the 1930s most economic analysis did not separate out individual economics behavior from aggregate behavior. With the Great Depression of the 1930s, suffered throughout the developed world at the time, and the development of the concept of national income and product statistics, the field of macroeconomics began to expand. Particularly influential were the ideas of John Maynard Keynes, who formulated theories to try to explain the Great Depression. Before that time, comprehensive national accounts, as we know them today, did not exist .One of the challenges of economics has been a struggle to reconcile macroeconomic and microeconomic models. Starting in the 1950s, macroeconomists developed micro-based models of macroeconomic behavior (such as the consumption function). Dutch economist Jan Tinbergen developed the first comprehensive national macroeconomic model, which he first built for the Netherlands and later applied to the United States and the United Kingdom after World War II. The first global macroeconomic model, Wharton Econometric Forecasting Associates LINK project, was initiated by Lawrence Klein and was mentioned in his citation for the Nobel Memorial Prize in Economics in 1980.Theorists such as Robert Lucas Jr suggested (in the 1970s) that at least some traditional Keynesian (after British economist John Maynard Keynes) macroeconomic models were questionable as they were not derived from assumptions about individual behavior. However, New Keynesian macroeconomics has generally presented microeconomic models to shore up their macroeconomic theorizing, and some Keynesians have contested the idea that microeconomic foundations are essential, if the model is analytically useful.The various schools of thought are not always in direct competition with one another -- even though they sometimes reach differing conclusions. Macroeconomics is an ever evolving area of research. The goal of economic research is not to be "right," but rather to be accurate. It is likely that none of the current schools of economic thought perfectly capture the workings of the economy. They do, however, each contribute a small piece of the overall puzzle. As one learns more about each school of thought, it is possible to combine aspects of each in order to reach an informed synthesis.

2006-07-20T19:50:00.000-07:00

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