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2022 | Buch

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Macroeconomic Policy

Demystifying Monetary and Fiscal Policy

verfasst von: Prof. Farrokh K. Langdana

Verlag: Springer International Publishing

Buchreihe : Springer Texts in Business and Economics

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book is an applications-oriented text designed for individuals who desire a hands-on approach to analyzing the effects of fiscal and monetary policies. Significantly updated for the fourth edition, the text provides an understanding of the global economy in the wake of the COVID crisis, discussing topics such as pandemic related supply and demand-side shocks, the role of Modern Monetary Theory (MMT) in financing COVID rescue plans, the effect of the US, India, Eurozone and China’s post-COVID economies on emerging and transitioning economies, and the resurgence of inflation. This edition includes deeper coverage on the issue of budget deficit sustainability and on trade wars, especially in a global context, and revisits the life cycles of speculative asset price (SAP) bubbles, especially in the housing markets and in SPACs.

The fourth edition contains several brand-new cases and media articles that are carefully positioned to relate explicitly to theory, and to look ahead to and preempt global macro situations and polices in the years to come. MBA students and Executive MBA students who appreciate the importance of monetary and fiscal analysis will find this text to be right on target. Financial analysts and individual investors who need to strip away economic myths and jargon and systematically examine and understand the effects of macro policies on variables such as inflation, output, employment and interest rates, will also find the book extremely useful.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction and Overview of the Fourth Edition

Abstract

In recent times, authors of macroeconomics texts have faced a series of daunting challenges. The primary challenge lies in the very nature of the subject. Monetary and fiscal policies influence wages, employment, inflation, output, interest rates, and exchange rates and affect virtually all individuals in emerging as well as in developed economies. The applicability and pervasiveness of macroeconomics have never been in doubt. In fact, it is these very aspects that pose the major challenges to authors of texts pertaining to the analysis of monetary and fiscal policies.

Farrokh K. Langdana

Chapter 2. National Income Accounts

Abstract

This foundation chapter begins with definitions of key macrovariables and policy instruments essential to macroeconomic policy analysis.

Farrokh K. Langdana

Chapter 3. Budget Deficits, Trade Deficits, and Global Capital Flows: The National Savings Identity

Abstract

In this cornerstone chapter, the vitally important National Savings Identity (NSI), linking trade and budget balances to global capital flows, interest rates, and exchange rates, makes its first appearance. In many ways, this chapter, linking the “twin deficits” in a fundamentally intuitive manner, sets the tone for macroeconomic policies to be discussed in the following chapters.

Farrokh K. Langdana

Chapter 4. Aggregate Demand: Setting the Stage for Demand-Side Stabilization

Abstract

This chapter marks the first step towards the construction of the ISLM/ADAS model which will power macroeconomic analyses in the chapters to come. At this stage we have completed an intuitive overview of the broad links between global capital flows, fiscal and trade imbalances, and their effects on interest rates and exchange rates.

Farrokh K. Langdana

Chapter 5. Demand-Side Stabilization: Overheating, Hard Landing, and Sap Bubbles

Abstract

In the previous chapter we examined the possibility of a shift in the goods market equilibrium from E₀ to a higher equilibrium E₁, which equated to an equivalent rightward shift in the AD curve. This chapter continues the analysis with a discussion of the specific fiscal and monetary policies by which the aggregate demand (AD) curve can be shifted to enact demand-side stabilization. This will be followed by an in-depth description of overheating, soft landings, and hard landings.

Farrokh K. Langdana

Chapter 6. Long-Term Interest Rates, the Yield Curve, and Hyperinflation

Abstract

This chapter introduces the role of intertemporal expectations into our analysis. Effects of current and expected inflation on long-term interest rates will be the focus of the first half of this chapter. This will be followed by a discussion of the ultimate macroeconomic meltdown—hyperinflation.

Farrokh K. Langdana

Chapter 7. ISLM: The Engine Room

Abstract

The preceding chapters have included definitions and analyses of discrete components and aspects of the macroeconomy. We discussed the goods market and the multiplier effect in some detail, before exploring overheating and soft and hard landings using AD-AS analysis. The previous chapter included a fairly detailed study of calamitous hyperinflations and ended with a discussion of the intertemporal and expectational influences underlying long-term interest rates. Now the powerful ISLM model discussed in this chapter will synthesize all the disparate diagrams and linkages discussed earlier into one logical unifying framework.

Farrokh K. Langdana

Chapter 8. The Classical Model

Abstract

In this chapter, changes in the rate of inflation are finally incorporated into the ISLM-ADAS analysis. This raises the overall level of sophistication of our analysis from Chap. 7 by incorporating a “real-world” aggregate supply curve into the ISLM analysis. The stage is also set for an explanation of paradigm shifts between Keynesian and supply-sider models.

Farrokh K. Langdana

Chapter 9. The Keynesian Model

Abstract

In Cambridge, England, as you walk up King’s Parade keeping that late-medieval architectural gem, King’s College Chapel, to your right, you will come to a fairly nondescript lane known as King’s Lane. It is not prominently marked; one could easily miss it. Leave the crowds behind by taking a right and turn down King’s Lane, keeping King’s College to the right. The lane ends in a sharp left to form an elbow where Queen’s Lane begins. At this elbow in the lane, look up to your right at the row of windows located directly above a (usually locked) gateway into King’s College. These windows belong to the room where macroeconomic history was made—Keynes’ office at King’s College in Cambridge University. Welcome to the macroeconomic model that changed Macroeconomics. Welcome to Keynesian ISLMADAS.

Farrokh K. Langdana

Chapter 10. The Supply-Side Model and the New Economy

Abstract

By the early 1980s, the macroeconomic landscape had changed significantly for the United States and several other Western European economies. Once-successful Keynesian discretionary demand-side stabilization policies appeared to be ineffective. The output-inflation tradeoff seemed to be no longer in evidence—expansionary fiscal and monetary stimuli only yielded additional inflation with no accompanying increase in GDP growth or employment. The Phillips curve, for all intents and purposes, appeared to be dead. It was time for a Paradigm Shift. Behold Supply-Side Economics.

Farrokh K. Langdana

Chapter 11. After COVID: MMT and Other Major Global Macropolicy Issues

Abstract

This chapter has been added to this edition as a capstone chapter, highlighting and synthesizing the major macroeconomic post-COVID issues. This new chapter, inserted between the discussion of both the two major macromodels and the next chapter on monetary institutions, has been presented in a format derived from my blogs, media articles, and seminars conducted during and following the pandemic.

Farrokh K. Langdana

Chapter 12. Central Banks and Monetary Policy

Abstract

After analyzing monetary policy in both Keynesian and rational expectations paradigms, and then catching our breath and summarizing the events of the COVID era, the time has finally come to explore the exact mechanism by which central banks enact monetary growth.

Farrokh K. Langdana

Backmatter

Titel: Macroeconomic Policy
verfasst von: Prof. Farrokh K. Langdana
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-92058-6
Print ISBN: 978-3-030-92057-9
DOI: https://doi.org/10.1007/978-3-030-92058-6