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Macro II Introduction

Macro II Introduction. Course information. 5EN453, 2 Lectures (6 ECTS) Lecturer: Pavel Potužák, Dpt. of Economics Office hours: T hursday 1 3 : 15 -1 5 : 15 , NB343 Website: http://keke.vse.cz/studium/materialy/5en453-macroeconomics-ii/. Course information.

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Macro II Introduction

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  1. Macro IIIntroduction

  2. Course information • 5EN453, 2 Lectures (6 ECTS) • Lecturer: Pavel Potužák, Dpt. of Economics • Office hours: Thursday 13:15-15:15, NB343 • Website: http://keke.vse.cz/studium/materialy/5en453-macroeconomics-ii/

  3. Course information • Textbook: David Romer (2006): Advanced Macroeconomics, 3rd edition (or higher) • Download: kekebooks.vse.cz (psw: keke123) • Barro: Macroeconomics (1997,2008) (Optional)

  4. Course information • Distribution of points: • 40 Points for Midterm in the 8th week (12th for ill students, or in Exam period in case of even longer illness): • It covers 1st part of the semester. (Solow, Ramsey) • 40 Points for Final test in the Exam period: • It covers 2nd part of the semester (from Diamond to NKE). • 20 points for 5 Problem sets (HW).Each for 4 p.

  5. Course information • 100 points altogether: • 90-100 points … 1 • 75-89 points … 2 • 60-74 points … 3 • 50-59 … 4+ implies 2nd attempt. Comprehensive test covering the whole semester for 100 p. (Then you need at least 60 points to pass.) • 0-49 … 4 (Failed) • No Selective Excuse („Omluveno“) in this Course (only General,i.e. all (or majority of) courses), since there will be a wide range of terms in the Exam period.

  6. The Science of Macroeconomics • Master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature of his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.” J. M. Keynes "Alfred Marshall,  1842-1924" The Economic Journal, (Sept.,1924)  • Keynes(1936) as a father of Macroeconomics

  7. The Science of Macroeconomics • Macroeconomics, the study of the economy as awhole, attempts to answer questions like: • Why have some countries experienced rapid growth in incomes while others stagnated in poverty? • Why do some countries have highrates of inflation while others maintain stable prices? • Why do all countries experiencerecessions and depressionsand (how) can (and should?) government policy reduce the frequency andseverity of these episodes?

  8. 9/11/2001 First oil price shock Great Depression Second oil price shock World War II U.S. Real GDP per capita (2000 dollars) long-run upward trend…

  9. Real GDP growth rate Average growth rate Growth rates of real GDP, U.S. 10 8 6 4 2 0 -2 -4 1970 1975 1980 1985 1990 1995 2000 2005

  10. CR vs. EU GDP per head, EU27 = 100

  11. Kaldor's stylized facts -The rate of growth of output per worker is roughly constant over long periods of time, and its growth rate does not seem to diminish The shares of national income received by labor and capital are roughly constant over long periods of time -The rate of growth of the capital stock is roughly constant over long periods of time -The capital/output ratio is roughly constant over long periods of time -The rate of return on investment is roughly constant over long periods of time -The real wage grows over time

  12. The ratio of labor income to total income in the U.S. Labor’s share of total income Labor’s share of income is approximately constant over time.(Hence, capital’s share is, too.)

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