Common Sense Macroeconomics

Contents
Preface
About the Author
Acknowledgments
Chapter 1 Introduction: Microeconomic Foundations and Common Sense
	1. Common Complaints from Students
	2. Common Sense
	3. High Growth with High Income Taxes
	4. Usefulness of Econometrics
	5. Dogmas are Dangerous
	6. Candidness
	7. Inequality and Wealth Concentration
	8. The Tax Structure
	9. Regressive Interest Rates
	10. Too Many Models
	11. Unnecessary Complications
	12. Ideological Neutrality
Chapter 2 The General Standard of Living
	1. The Standard of Living
	2. The Average Real Wage
	3. The Production Wage
	4. Social Trends
	5. Mushrooming Inequality
	6. The Real Wage and Labor Productivity
		6.1. Real Wage and Productivity: 1874–1972
	7. Unemployment
	8. Prices, Inflation and Deflation
	9. The System of Taxation
		9.1. Free Trade and the Income Tax
	10. Globalization of the Economy
	11. Manufacturing, Farming and Services
	12. Summary
Chapter 3 GDP Accounting
	1. GDP
	2. Other Measures of Economic Activity
	3. Measurement of GDP
	4. The Income Approach
	5. The Value-Added Approach
	6. Personal Disposal Income
	7. Real and Nominal Values
	8. Real and Nominal GDP
	9. The Consumer Price Index (CPI)
	10. Inflation
	11. Growth and Business Cycles
	12. The Cycle of Inflation
	13. The Cycle of Money Growth
	14. Inflation and Money Growth
	15. Cycles as Forecasting Devices
	16. The Cost of Inflation
	17. The Lenders
	18. Summary
Chapter 4 The Classical Micro Model
	1. Assumptions
	2. The Invisible Hand
	3. The American Republic
	4. Supply and Demand
		4.1. Other Things Remaining Constant
	5. Movement along a Curve and of a Curve
	6. Market Demand
	7. Market Supply
		7.1. Why Is the Supply Curve Positively Sloped?
	8. The Shift of the Supply Curve
	9. Equilibrium Price
	10. Market Equilibrium
	11. Summary
Chapter 5 The Classical Macro Model
	1. National Demand
	2. Aggregate Demand and Supply
		2.1. Equilibrium GDP and Actual GDP
	3. Say’s Law
	4. Savings, Investment and Overproduction
	5. The Rate of Interest
	6. The Theory of Employment
		6.1. An Overview
	7. The Quantity Theory of Money
	8. Full Employment
		8.1. Natural Unemployment
	9. All Unemployment is Voluntary
	10. Economic Policy
	11. The Economy in the 19th Century
	12. The Illogic of the Classical Model
	13. Investment in a Recession
	14. Instability in the Classical Model
	15. Standardizing the Graph
	16. Criticism by Keynes: Faulty Classical Assumptions
	17. Summary
Chapter 6 The Neoclassical Model
	1. What Is New in the Neoclassical Model?
	2. Labor Supply
	3. The AD and AS Curves
	4. Supply Shocks and the Business Cycle
	5. Supply-Side Economics
		5.1. Overview
	6. The Illogic of the Neoclassical Model
	7. The Issue of Labor Supply
	8. The Voluntary Unemployment Syndrome
	9. Corporate Taxes and Investment
	10. Summary
Chapter 7 The Keynesian Model
	1. The Classical Response to the Depression
	2. Keynesian AD and AS
	3. Stability of Keynesian Equilibrium
		3.1. Overview
	4. Savings and Investment
	5. The Paradox of Thrift
	6. The GDP Multiplier
	7. Government Spending and Taxes
	8. The Balanced Budget Multiplier
	9. Output and Employment
	10. Labor Market
	11. Investment
	12. The Rate of Interest
	13. Speculative Demand for Money
	14. Inflation
		14.1. The Money Wage
	15. What Caused the Great Depression?
	16. Economic Policy
		16.1. A Progressive Tax System
		16.2. Monetary Stimulus
	17. An Assessment of Keynes’s Contribution
	18. Summary
Chapter 8 The Neo-Keynesian Model
	1. Automatic Stabilizers
	2. AD–AS Again
		2.1. The AD Curve
	3. The AS Curve
	4. Macro Equilibrium
	5. Fiscal Policy in the Short Run
		5.1. Crowding Out
	6. Monetary Policy in the Short Run
	7. Economic Policy in the Long Run
	8. An Initial Shift of the AS Curve
	9. The Inflation–Unemployment Tradeoff
		9.1. The Flaw of the Phillips Curve
	10. The Neoclassical Resurgence
	11. Rational Expectations
		11.1. Professor Lucas’s Average Worker
	12. Summary
Chapter 9 A Classi-Keynesian Model
	1. The Fixed Price Case
	2. The Variable Price Case
	3. Price Level and the Interest Rate
	4. The AS Curve Again
	5. Macro Equilibrium
	6. Monetary Policy
	7. Employment and the Real Wage
	8. A Rise in the Price of Oil
	9. The Employment Paradox
	10. Summary
Chapter 10 The Anatomy of Stock Market Bubbles and Crashes
	1. What Is a Bubble?
	2. Wages and Productivity
	3. Centrality of the Labor Market
	4. The Wage Gap
	5. Budget Deficits
	6. Concentration of Wealth
	7. Debt and Destitution
	8. Macro Equilibrium and Monopoly Capitalism
	9. Debt and Inequality
	10. Rocketing Profits and Share Prices
	11. Bubble Economy
	12. The Inevitable Crash
	13. Reasons for the Rising Wage Gap
		13.1. Regressive Taxation
		13.2. Monopolistic Competition
		13.3. Labor Union Decline
		13.4. Free Trade
		13.5. The Declining Minimum Wage
		13.6. Monopolistic Competition and New Technology
	14. The Macro Model
	15. The Stock Market Again
	16. U.S. Economy: 1962–2019
	17. Summary
Chapter 11 Wage Gap, Global Imbalances and Poverty
	1. Wage Gap and Poverty: The 1950s
	2. Government Programs
	3. Regressive Taxation
	4. Regressive Interest Rates
	5. Global Poverty
Chapter 12 Long-Run Growth and Growth Cycles
	1. Growth Fluctuations
	2. Professor Solow’s Growth Model
	3. Productivity Growth
	4. Population Growth
	5. New Growth Theory
	6. A Critique of the Growth Theory, New and Old
	7. Factors in Demand Growth
		7.1. The Demand Growth Curve
	8. Supply Growth
	9. Growth Equilibrium
	10. Growth Cycles
	11. Economic Policy
	12. Summary
Chapter 13 The Supply of Money
	1. Money Supply
	2. The Missing Money
	3. Money Supply or Money Demand
	4. The Banking System
	5. Fractional Reserves and the Money Tree
	6. The Required Reserve Ratio
	7. Money Multiplier
	8. The Regulation of Money Supply
	9. Changing the Reserve Requirements
	10. Changing the Discount Rate
	11. Open Market Operations
	12. Margin Requirements
	13. Monetary Policy and the Interest Rate
	14. How Effective is Monetary Policy?
	15. The Cycle of Money Growth
	16. Summary
Chapter 14 An Open Economy
	1. Why Do Nations Trade?
	2. The Production Gain from Trade
	3. The Growth Gain from Trade
	4. The Key Currency Gain from Trade
	5. The American Business Empire
	6. From Fixed to a Flexible Exchange Rate
	7. Rising Wage Gap in Japan
	8. Developments in China
	9. Foreign Bond Holdings
	10. The Rate of Exchange
	11. The Stubborn Trade Deficit
	12. The Price Level and the Trade Deficit
	13. The Foreign Trade Multiplier
	14. Effectiveness of Economic Policy
	15. President Trump’s Tariffs
	16. Tariffs and Prices
	17. Summary
Chapter 15 Economic Reform
	1. New Dogmas
	2. Ethical Economic Policy
	3. The Legacy of Unethical Policy
	4. The Legacy of Neo-Keynesian Economics
	5. Short-Run Reforms
		5.1. An FDIC Bank
		5.2. The Putting-Out System
		5.3. A Modified Putting-Out System
	6. The Impact of Other Measures
		6.1. A Balanced Economy
	7. Economic Democracy
		7.1. Low Inequality
		7.2. Fair and Efficient
		7.3. Stability
	8. Mass Capitalism
Bibliography
Index