Macro II Introduction

1
Macro IIIntroduction
2
Course information

• 5EN453, 2 Lectures (6 ECTS)
• Lecturer Pavel Potužák, Dpt. of Economics
• Office hours Thursday 1315-1515, NB343
• Website http//keke.vse.cz/studium/materialy/5en4
  53-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, philosopherin 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 mans 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 a
  whole, attempts to answer questions like
• Why have some countries experienced rapid growth
  in incomes while others stagnated in poverty?
• Why do some countries have high rates of
  inflation while others maintain stable prices?
• Why do all countries experience recessions and
  depressions and (how) can (and should?)
  government policy reduce the frequency and
  severity of these episodes?

8
U.S. Real GDP per capita (2000 dollars)
long-run upward trend
9
Growth rates of real GDP, U.S.
10
8
6
4
2
0
-2
-4
1970
1975
1980
1985
1990
1995
2000
2005
10
(No Transcript)
11
(No Transcript)
12
(No Transcript)
13
(No Transcript)
14
CR vs. EU

• GDP per head, EU27 100

15
(No Transcript)
16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
(No Transcript)
26

• 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

27
The ratio of labor income to total income in the
U.S.
Labors share of total income
Labors share of income is approximately
constant over time.(Hence, capitals share is,
too.)
28
(No Transcript)
29
(No Transcript)