Machine generated contents note: ch. 1 A Tour of the World -- 1-1.The Crisis -- 1-2.The United States -- Should You Worry about the United States Deficit? -- 1-3.The Euro Area -- How Can European Unemployment Be Reduced? -- What Has the Euro Done for Its Members? -- 1-4.China -- 1-5.Looking Ahead -- Appendix: Where to Find the Numbers -- ch. 2 A Tour of the Book -- 2-1.Aggregate Output -- GDP: Production and Income -- Nominal and Real GDP -- GDP: Level versus Growth Rate -- 2-2.The Unemployment Rate -- Why Do Economists Care about Unemployment? -- 2-3.The Inflation Rate -- The GDP Deflator -- The Consumer Price Index -- Why Do Economists Care about Inflation? -- 2-4.Output, Unemployment, and the Inflation Rate: Okun's Law and the Phillips Curve -- Okun's Law -- The Phillips Curve -- 2-5.The Short Run, the Medium Run, the Long Run -- 2-6.A Tour of the Book -- The Core -- Extensions -- Back to Policy -- Epilogue -- Appendix: The Construction of Real GDP, and Chain-Type Indexes

Note continued: The Short Run -- ch. 3 The Goods Market -- 3-1.The Composition of GDP -- 3-2.The Demand for Goods -- Consumption (c) -- Investment (/) -- Government Spending (G) -- 3-3.The Determination of Equilibrium Output -- Using Algebra -- Using a Graph -- Using Words -- How Long Does It Take for Output to Adjust? -- 3-4.Investment Equals Saving: An Alternative Way of Thinking about Goods -- Market Equilibrium -- 3-5.Is the Government Omnipotent? A Warning -- ch. 4 Financial Markets -- 4-1.The Demand for Money -- Deriving the Demand for Money -- 4-2.Determining the Interest Rate: I -- Money Demand, Money Supply, and the Equilibrium Interest Rate -- Monetary Policy and Open Market Operations -- Choosing Money or Choosing the Interest Rate? -- Money, Bonds, and Other Assets -- 4-3.Determining the Interest Rate: II -- What Banks Do -- The Supply and the Demand for Central Bank Money -- 4-4.Two Alternative ways of looking at the Equilibrium

Note continued: The Federal Funds Market and the Federal Funds Rate -- The Supply of Money, the Demand for Money, and the Money Multiplier -- Understanding the Money Multiplier -- ch. 5 Goods and Financial Markets: The IS-LM Model -- 5-1.The Goods Market and the IS Relation -- Investment, Sales, and the Interest Rate -- Determining Output -- Deriving the IS Curve -- Shifts of the IS Curve -- 5-2.Financial Markets and the LM Relation -- Real Money, Real Income, and the Interest Rate -- Deriving the LM Curve -- Shifts of the LM Curve -- 5-3.Putting the IS and the LM Relations Together -- Fiscal Policy, Activity, and the Interest Rate -- Monetary Policy, Activity, and the Interest Rate -- 5-4.Using a Policy Mix -- 5-5.How Does the IS-LM Model Fit the Facts? -- Appendix: An Alternative Derivation of the LM Relation as an Interest Rate Rule -- The Medium Run -- ch. 6 The Labor Market -- 6-1.A Tour of the Labor Market -- The Large Flows of Workers

Note continued: 6-2.Movements in Unemployment -- 6-3.Wage Determination -- Bargaining -- Efficiency Wages -- Wages, Prices, and Unemployment -- The Expected Price Level -- The Unemployment Rate -- The Other Factors -- 6-4.Price Determination -- 6-5.The Natural Rate of Unemployment -- The Wage-Setting Relation -- The Price-Setting Relation -- Equilibrium Real Wages and Unemployment -- From Unemployment to Employment -- From Employment to Output -- 6-6.Where We Go from Here -- Appendix: Wage- and Price-Setting Relations versus Labor Supply and Labor Demand -- ch. 7 Putting All Markets Together: The AS-AD Model -- 7-1.Aggregate Supply -- 7-2.Aggregate Demand -- 7-3.Equilibrium in the Short Run and in the Medium Run -- Equilibrium in the Short Run -- From the Short Run to the Medium Run -- 7-4.The Effects of a Monetary Expansion -- The Dynamics of Adjustment -- Going Behind the Scenes -- The Neutrality of Money -- 7-5.A Decrease in the Budget Deficit

Note continued: Deficit Reduction, Output, and the Interest Rate -- Budget Deficits, Output, and Investment -- 7-6.An Increase in the Price of Oil -- Effects on the Natural Rate of Unemployment -- The Dynamics of Adjustment -- 7-7.Conclusions -- The Short Run versus the Medium Run -- Shocks and Propagation Mechanisms -- Where We Go from Here -- ch. 8 The Phillips Curve, the Natural Rate of Unemployment, and Inflation -- 8-1.Inflation, Expected Inflation, and Unemployment -- 8-2.The Phillips Curve -- The Early Incarnation -- Mutations -- The Phillips Curve and the Natural Rate of Unemployment -- The Neutrality of Money, Revisited -- 8-3.A Summary and Many Warnings -- Variations in the Natural Rate across Countries -- Variations in the Natural Rate over Time -- Disinflation, Credibility, and Unemployment -- High Inflation and the Phillips Curve Relation -- Deflation and the Phillips Curve Relation

Note continued: Appendix: From the Aggregate Supply Relation to a Relation between Inflation, Expected Inflation, and Unemployment -- ch. 9 The Crisis -- 9-1.From a Housing Problem to a Financial Crisis -- Housing Prices and Subprime Mortgages -- The Role of Banks -- 9-2.The Use and Limits of Policy -- Initial Policy Responses -- The Limits of Monetary Policy: The Liquidity Trap -- The Limits of Fiscal Policy: High Debt -- 9-3.The Slow Recovery -- The Long Run -- ch. 10 The Facts of Growth -- 10-1.Measuring the Standard of Living -- 10-2.Growth in Rich Countries since 1950 -- The Large Increase in the Standard of Living since 1950 -- The Convergence of Output per Person -- 10-3.A Broader Look across Time and Space -- Looking across Two Millennia -- Looking across Countries -- 10-4.Thinking About Growth: A Primer -- The Aggregate Production Function -- Returns to Scale and Returns to Factors -- Output per Worker and Capital per Worker -- The Sources of Growth

Note continued: ch. 11 Saving, Capital Accumulation, and Output -- 11-1.Interactions between Output and Capital -- The Effects of Capital on Output -- The Effects of Output on Capital Accumulation -- 11-2.The Implications of Alternative Saving Rates -- Dynamics of Capital and Output -- Steady-State Capital and Output -- The Saving Rate and Output -- The Saving Rate and Consumption -- 11-3.Getting a Sense of Magnitudes -- The Effects of the Saving Rate on Steady-State Output -- The Dynamic Effects of an Increase in the Saving Rate -- The U.S. Saving Rate and the Golden Rule -- 11-4.Physical versus Human Capital -- Extending the Production Function -- Human Capital, Physical Capital, and Output -- Endogenous Growth -- Appendix: The Cobb-Douglas Production Function and the Steady State -- ch. 12 Technological Progress and Growth -- 12-1.Technological Progress and the Rate of Growth -- Technological Progress and the Production Function

Note continued: Interactions between Output and Capital -- Dynamics of Capital and Output -- The Effects of the Saving Rate -- 12-2.The Determinants of Technological Progress -- The Fertility of the Research Process -- The Appropriability of Research Results -- 12-3.The Facts of Growth Revisited -- Capital Accumulation versus Technological Progress in Rich Countries since 1985 -- Capital Accumulation versus Technological Progress in China -- Appendix: Constructing a Measure of Technological Progress -- ch. 13 Technological Progress: The Short, the Medium, and the Long Run -- 13-1.Productivity, Output, and Unemployment in the Short Run -- Technological Progress, Aggregate Supply, and Aggregate Demand -- The Empirical Evidence -- 13-2.Productivity and the Natural Rate of Unemployment -- Price Setting and Wage Setting Revisited -- The Natural Rate of Unemployment -- The Empirical Evidence -- 13-3.Technological Progress, Churning, and Distribution Effects

Note continued: The Increase in Wage Inequality -- The Causes of Increased Wage Inequality -- 13-4.Institutions, Technological Progress, and Growth -- Extensions -- Expectations -- ch. 14 Expectations: The Basic Tools -- 14-1.Nominal versus Real Interest Rates -- Nominal and Real Interest Rates in the United States since 1978 -- 14-2.Nominal and Real Interest Rates, and the IS-LM Model -- 14-3.Money Growth, Inflation, Nominal and Real Interest Rates -- Revisiting the IS-LM Model -- Nominal and Real Interest Rates in the Short Run -- Nominal and Real Interest Rates in the Medium Run -- From the Short to the Medium Run -- Evidence on the Fisher Hypothesis -- 14-4.Expected Present Discounted Values -- Computing Expected Present Discounted Values -- Using Present Values: Examples -- Nominal versus Real Interest Rates, and Present Values -- Appendix: Deriving the Expected Present Discounted Value Using Real or Nominal Interest Rates

Note continued: ch. 15 Financial Markets and Expectations -- 15-1.Bond Prices and Bond Yields -- Bond Prices as Present Values -- Arbitrage and Bond Prices -- From Bond Prices to Bond Yields -- Interpreting the Yield Curve -- The Yield Curve and Economic Activity -- 15-2.The Stock Market and Movements in Stock Prices -- Stock Prices as Present Values -- The Stock Market and Economic Activity -- A Monetary Expansion and the Stock Market -- An Increase in Consumer Spending and the Stock Market -- 15-3.Risk, Bubbles, Fads, and Asset Prices -- Stock Prices and Risk -- Asset Prices, Fundamentals, and Bubbles -- ch. 16 Expectations, Consumption, and Investment -- 16-1.Consumption -- The Very Foresighted Consumer -- An Example -- Toward a More Realistic Description -- Putting Things Together: Current Income, Expectations, and Consumption -- 16-2.Investment -- Investment and Expectations of Profit -- A Convenient Special Case -- Current versus Expected Profit

Note continued: Profit and Sales -- 16-3.The Volatility of Consumption and Investment -- Appendix: Derivation of the Expected Present Value of Profits under Static Expectations -- ch. 17 Expectations, Output, and Policy -- 17-1.Expectations and Decisions: Taking Stock -- Expectations, Consumption, and Investment Decisions -- Expectations and the IS Relation -- The LM Relation Revisited -- 17-2.Monetary Policy, Expectations, and Output -- From the Short Nominal Rate to Current and Expected Real Rates -- Monetary Policy Revisited -- 17-3.Deficit Reduction, Expectations, and Output -- The Role of Expectations about the Future -- Back to the Current Period -- The Open Economy -- ch. 18 Openness in Goods and Financial Markets -- 18-1.Openness in Goods Markets -- Exports and Imports -- The Choice between Domestic Goods and Foreign -- Goods -- Nominal Exchange Rates -- From Nominal to Real Exchange Rates -- From Bilateral to Multilateral Exchange Rates

Note continued: 18-2.Openness in Financial Markets -- The Balance of Payments -- The Choice between Domestic and Foreign Assets -- Interest Rates and Exchange Rates -- 18-3.Conclusions and a Look Ahead -- ch. 19 The Goods Market in an Open Economy -- 19-1.The IS Relation in the Open Economy -- The Demand for Domestic Goods -- The Determinants of C, I and G -- The Determinants of Imports -- The Determinants of Exports -- Putting the Components Together -- 19-2.Equilibrium Output and the Trade Balance -- 19-3.Increases in Demand, Domestic or Foreign -- Increases in Domestic Demand -- Increases in Foreign Demand -- Fiscal Policy Revisited -- 19-4.Depreciation, the Trade Balance, and Output -- Depreciation and the Trade Balance: The Marshail-Lerner Condition -- The Effects of a Depreciation -- Combining Exchange Rate and Fiscal Policies -- 19-5.Looking at Dynamics: The J-Curve -- 19-6.Saving, Investment, and the Current Account Balance

Note continued: Appendix: Derivation of the Marshall-Lerner Condition -- ch. 20 Output, the Interest Rate, and the Exchange Rate -- 20-1.Equilibrium in the Goods Market -- 20-2.Equilibrium in Financial Markets -- Money versus Bonds -- Domestic Bonds versus Foreign Bonds -- 20-3.Putting Goods and Financial Markets Together -- 20-4.The Effects of Policy in an Open Economy -- The Effects of Fiscal Policy in an Open Economy -- The Effects of Monetary Policy in an Open Economy -- 20-5.Fixed Exchange Rates -- Pegs, Crawling Pegs, Bands, the EMS, and the Euro -- Pegging the Exchange Rate, and Monetary Control -- Fiscal Policy under Fixed Exchange Rates -- Appendix: Fixed Exchange Rates, Interest Rates, and Capital Mobility -- ch. 21 Exchange Rate Regimes -- 21-1.The Medium Run -- Aggregate Demand under Fixed Exchange Rates -- Equilibrium in the Short Run and in the Medium Run -- The Case For and Against a Devaluation -- 21-2.Exchange Rate Crises under Fixed Exchange Rates

Note continued: 21-3.Exchange Rate Movements under Flexible Exchange Rates -- Exchange Rates and the Current Account -- Exchange Rates and Current and Future Interest Rates -- Exchange Rate Volatility -- 21-4.Choosing between Exchange Rate Regimes -- Common Currency Areas -- Hard Pegs, Currency Boards, and Dollarization -- Appendix 1 Deriving Aggregate Demand under Fixed Exchange Rates -- Appendix 2 The Real Exchange Rate and Domestic and Foreign Real Interest Rates -- Back to Policy -- ch. 22 Should Policy Makers Be Restrained? -- 22-1.Uncertainty and Policy -- How Much Do Macroeconomists Actually Know? -- Should Uncertainty Lead Policy Makers to Do Less? -- Uncertainty and Restraints on Policy Makers -- 22-2.Expectations and Policy -- Hostage Takings and Negotiations -- Inflation and Unemployment Revisited -- Establishing Credibility -- Time Consistency and Restraints on Policy Makers -- 22-3.Politics and Policy -- Games between Policy Makers and Voters

Note continued: Games between Policy Makers -- Politics and Fiscal Restraints -- ch. 23 Fiscal Policy: A Summing Up -- 23-1.What We Have Learned -- 23-2.The Government Budget Constraint: Deficits, Debt, Spending, and Taxes -- The Arithmetic of Deficits and Debt -- Current versus Future Taxes -- The Evolution of the Debt-to-GDP Ratio -- 23-3.Ricardian Equivalence, Cyclical Adjusted Deficits, and War Finance -- Ricardian Equivalence -- Deficits, Output Stabilization, and the Cyclically Adjusted Deficit -- Wars and Deficits -- 23-4.The Dangers of High Debt -- High Debt, Default Risk, and Vicious Cycles -- Debt Default -- Money Finance -- ch. 24 Monetary Policy: A Summing Up -- 24-1.What We Have Learned -- 24-2.The Optimal Inflation Rate -- The Costs of Inflation -- The Benefits of Inflation -- The Optimal Inflation Rate: The Current Debate -- 24-3.The Design of Monetary Policy -- Money Growth Targets and Target Ranges -- Inflation Targeting -- Interest Rate Rules

Note continued: 24-4.Challenges from the Crisis -- The Liquidity Trap -- Macro Prudential Regulation -- ch. 25 Epilogue: The Story of Macroeconomics -- 25-1.Keynes and the Great Depression -- 25-2.The Neoclassical Synthesis -- Progress on All Fronts -- Keynesians versus Monetarists -- 25-3.The Rational Expectations Critique -- The Three Implications of Rational Expectations -- The Integration of Rational Expectations -- 25-4.Developments in Macroeconomics to the 2009 Crisis -- New Classical Economics and Real Business Cycle Theory -- New Keynesian Economics -- New Growth Theory -- Toward an Integration -- 25-5.First Lessons for Macro-economics after the Crisis.