Macroeconomics

I N D E X

| 593

rate of growth of, inflation and

unemployment and, 569

real effects of, 278

Moral hazard, 174–175

Mortgage market

bank capital and, 556

economic downturn of 2008-2009

and, 69, 332–333, 541

MPC. See Marginal propensity to con-

sume (MPC)

MPK. See Marginal product of capital

(MPK)

MPL. See Marginal product of labor

(MPL)

Mugabwe, Robert, 111, 112

Multipliers

government-purchases, 292–294, 293f

money, 551

tax, 294–295, 295f

Mundell, Robert A., 339, 340

Mundell-Fleming model, 339–370, 345f

with changing price level, 366–369,

367f, 368f

choice of exchange rate and, 361–366

economic policy in, 355, 356t

fixed exchange rates and, 349–355

floating exchange rates and, 345–348

goods market and IS* curve and,

341–343, 342f

interest rate differentials and,

356–361, 358f

money market and LM* curve and,

343, 344f

Municipal bonds, interest rates and, 64

Mussa, Michael, 109n

NAFTA. See North American Free

Trade Agreement (NAFTA)

NAIRU. See Non-accelerating inflation

rate of unemployment (NAIRU)

Napoleonic Code, 234

National Bureau of Economic

Research (NBER), 258–259

National income, 30–31

division of, 54–56

National income accounting, 18

National income accounts identity, 27

National saving, 67, 68f

fiscal policy and, 70, 70f

National Science Foundation, 236

Natural level of output, 273

Natural-rate hypothesis, 399–400

Natural rate of unemployment,

163–166, 165f. See also Non-

accelerating inflation rate of

unemployment (NAIRU)

Nazi POW camps, money in, 82

NBER. See National Bureau of

Economic Research (NBER)

Near money, 563

Neoclassical model of investment, 527

Neoclassical theory of distribution, 49

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Net capital outflow, 122–123

Net exports, 27. See also Trade balances

international flows of capital and

goods and, 120–122

real exchange rate and, 138–139, 139f

Net foreign investment, 122–123

Netherlands

collective bargaining in, 173t

exchange rate of, 354

government debt of, 468t

Net investment, 530

Net national product (NNP), 30

Neumark, David, 171n

Nevins, Alan, 175

Newton, Isaac, 242

New Zealand

Big Mac price and exchange rate in,

148t

central bank of, 458, 459

collective bargaining in, 173t

economic growth in, 229

government debt of, 468t

inflation in, 145f

inflation targeting in, 458

settlement of, 235

Nickell, Stephen, 183n

Niger, population growth and income

per person in, 215f

Nigeria

investment rate in, 202f

standard of living in, 192t

Nixon, Richard M., 4, 392

NNP. See Net national product (NNP)

Nominal exchange rates, 135–136

determinants of, 143–144

inflation and, 144–145, 145f

Nominal GDP, real GDP versus, 23–24

Nominal interest rates, 63

AD-AS model and, 414–415

definition of, 94

demand for money and, 98–100

Fisher effect and, 94–95

inflation and, 95f, 95–96, 96f

in nineteenth century, 97

Nominal variables, 112

Non-accelerating inflation rate of

unemployment (NAIRU)

Phillips curve and, 390–391

precision of estimates of, 395

Nordhaus, William,  454n

Normal goods, 505–506

North American Free Trade Agreement

(NAFTA), 359

Norway

Big Mac price and exchange rate in,

148t

collective bargaining in, 173t

devaluation by, 354

government debt of, 468t

inflation in, 145f

investment rate in, 202f

population growth and income per

person in, 215f

Obama, Barack, 4, 257, 366

government debt under, 470

government purchases under,

297–298

infrastructure spending under, 233

saving encouragement under,

520–521

stimulus package under, 297–298,

333, 486

TARP and, 475

Obstfeld, Maurice, 339n

Oil price increase, productivity slow-

down and, 237

Okun, Arthur M., 261, 396n

Okun’s law, 260–263, 261f, 262f, 396,

398

100 percent experience rated unem-

ployment insurance, 168

100-percent-reserve banking, 548

OPEC. See Organization of Petroleum

Exporting Countries (OPEC)

Open economies, 61, 119–150. See also

Exchange rates; International

flows of capital and goods; Large

open economies; Mundell-

Fleming model; Small open

economies

Open-market operations, 84, 552

Optimization, definition of 13

of consumption, 504f, 504–505

Organization of Petroleum Exporting

Countries (OPEC)

oil price shock and, 237, 390,

392–393

stagflation caused by, 282–283

Oswald, Andrew J., 184n

Output. See also Gross domestic prod-

uct (GDP); National income

in AD-AS model, 410–411

tradeoff between output variability

and inflation variability, 432–435,

433f

Outside lag, 447

Outsiders, wages and, 173, 400

Paasche indexes, 33–34

Pakistan

inflation in, 145f

investment rate in, 202f

population growth and income per

person in, 215f

standard of living in, 192t

Parker, Jonathan A., 510n, 518n

Partially experience rated unemploy-

ment insurance, 168

Percentage changes, 26

Permanent income, 514–516

Permanent-income hypothesis,

514–516

implications of, 515–516

Perry, George L., 40n, 106n

Personal income, disposable, 31

Peru, investment rate in, 202f, 203

Petersen, Bruce C., 538n

Phelps, Edmund, 14, 204n, 390

Philippines, standard of living in, 192t

Phillips, A. W., 390

Phillips curve, 380, 388–400, 569–570

adaptive expectations and inflation

inertia and, 390–391

AD-AS model and, 412–413

challenge to natural-rate hypothesis

and, 399–400

demand-pull and cost-push inflation

and, 391

deriving from aggregate supply curve,

388–390

disinflation and sacrifice ratio and,

395–396, 398–399, 399t

history of, 390

rational expectations and, 396–398

short-run, 393–395, 394f

short-run tradeoff and, 393–395, 394f

in United States, 391–393, 392f

Pigou, Arthur, 329

Pigou effect, 329

Plague, factor prices and, 56

Planned expenditure, Keynesian cross

and, 289–291, 290f

Plosser, Charles I., 254n

Poland

Big Mac price and exchange rate in,

148t

government debt of, 468t

Policymakers, distrust of, 453–454

Political business cycle, 454

Political process

distrust of, 453–454

government debt and, 487–488

Population growth, 211–217

effect on Solow growth model, 213f,

213–214

international, 214–215, 215f

Kremerian model of, 217

Malthusian model of, 216–217

Solow growth model and, 211–215

steady state with, 211–213, 212f

in United States, 215f

Portfolio theories, 557–558

Portugal

collective bargaining in, 173t

government debt of, 468t

population growth and income per

person in, 215f

POW camps, money in, 82

Precautionary saving, 513

Predetermined variables, 418

Preferences, indifference curves and,

503f, 503–504

Prescott, Edward C., 14, 185, 186n,

217n, 252–253, 254n, 463n

Present value, 502

Price(s). See also Consumer price index

(CPI); Deflation; Hyperinflation;

Inflation