Economics Stack Exchange
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Questions tagged [macroeconomics]

Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

Macroeconomics (from the Greek prefix makro- meaning "large" and economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies.

Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

With microeconomics, macroeconomics is one of the two most general fields in economics.

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If someone goes for a haircut, does it increase GDP?

If I go for a haircut, am I causing the GDP to rise because consumption is rising?
ROHAN PAUL
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Why must the rate of GDP growth be positive?

There are always expectations that GDP should be growing at a certain rate. This is what I see in the newspapers. I am not an economics major and this is a very basic student question. After adjusting for level of prices, meaning that forget about…
Medan
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Why plug deficits with bonds rather than printing money?

The UK is running a budget deficit £107 billion a year. Inflation is currently running at 1%. Given these facts, why do they plug the gap by selling debt rather than just creating the money to cover the gap? Just creating the money seems like it…
Simon Johnson
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Lagrangian: How to understand the No-Ponzi Condition

In http://www.uni-hamburg.de/fachbereiche-einrichtungen/fb03/iwwt/makro/slides2.pdf page 8, lagrangian is written as follow: $$L = E_0 \sum_{t=0}^{\infty}\beta^t\{U(C_t,N_t) + \lambda_t(P_tC_t + Q_tB_t - B_{t-1}-W_tN_t+T_t)+\psi_t(\lim_{T \to…
nba
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Why is capital often not included in New Keynesian models? Is there a reason other than modeling difficulty?

In New Keynesian models, like the ones in Gali's simple New Keynesian model or even Mankiw-Reis NK model on sticky information, capital is often not included. Now people do say that there are modeling difficulties and that's why capital ($K$) is…
NewK
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In log-linearized New Keynesian model, what do $Y$, $Y_t$, $y_t$ actually mean?

This may be a weird question, but I am unfortunately confused by terms. Let us suppose log-linearized New Keynesian model as suggested by Gali here: http://crei.cat/people/gali/pdf_files/monograph/slides-ch3.pdf My first question is, apparently…
NewK
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Would healthcare costs increase (in the long term) if all smokers quit?

According to research by Jan J. Barendregt, M.A., Luc Bonneux, M.D., and Paul J. van der Maas, Ph.D.: RESULTS Health care costs for smokers at a given age are as much as 40 percent higher than those for nonsmokers, but in a population in which no…
JonathanReez
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Deriving the Euler Equation

I want to derive the Euler Equation for the following: $$max \sum\limits_{t=0}^{T} = \beta^{t}U(C_t)$$ $$s.t. C_t+K_{t+1} \leq f(K_t) , t=0,1,2,...,T-1$$ $$-K_{T+1} \leq 0$$ I'm a bit confused about why the F.O.C. have that:…
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Why is overlapping generation model not a main model in macroeconomics?

It seems that overlapping generation model has far more realistic assumptions than ordinary Ramsey-Prescott RBC model for use in macroeconomics. Why is Ramsey-Prescott ones, even New Keynesian variants, are more popular than overlapping generation…
Mak
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Why is it good to create jobs?

I was reading this article on planned obsolescence, which states On a macroeconomic scale, the rapid turnover of goods powers growth and creates reams of jobs In context, it's implied that this is good - it is good to have people working to…
Mark Eichenlaub
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Is the economy a zero-sum game?

Theoretically speaking, if all the Earth's inhabitants were to save money and invest, is it possible for everybody to get, let's say, a 4% yearly return for everyone? Is the economy a zero sum game (where if someone gains, others lose) or not?
dreamoki
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How does a cash deposit change the M1 measure of the money supply?

The question asks what is the immediate effect of the cash deposit on the M1 measure of money supply. The official answer is "There is no change in the M1 measure of the money supply. (Demand deposits increase by the same amount that cash holdings…
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How did reducing the employment gender gap impact the US economy?

Premise In the United States, women have been replacing men in the workforce, or rather were from sometime prior to 1976 until the mid-90's. (The general upward trend is from the recent recession, sorry, I'm recycling a graph from another…
Jason Nichols
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How did Brexit wipe $2 trillion off world markets?

I read here (https://www.theguardian.com/business/live/2016/jun/24/global-markets-ftse-pound-uk-leave-eu-brexit-live-updates) and elsewhere that Brexit wiped \$2tr off world markets. How did that happen? Is this equivalent to \$2tr worth of a…
Kostas
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Is China at the golden savings rate s? If so, what is it?

Consider Solow growth model. Let $s$ denote savings rate. Suppose we estimate China invests 40% of it GDP rather than consuming. Assuming China is dynamically inefficient because they are a developing nation, how can I estimate what it's $s_{gold}$…
Stan Shunpike
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