Макроэкономика: Экономиканы тұтас қарастыру

Study of an economy as a whole

Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/GDP (gross domestic product) and national income, unemployment (including unemployment rates), price indices and inflation, consumption, saving, investment, energy, international trade, and international finance. Macroeconomics and microeconomics are the two most general fields in economics. The focus of macroeconomics is often on a country (or larger entities like the whole world) and how its markets interact to produce large scale phenomena that economists refer to as aggregate variables. In microeconomics the focus of analysis is often a single market, such as whether changes in supply or demand are to blame for price increases in the oil and automotive sectors. From introductory classes in "principles of economics" through doctoral studies, the macro/micro divide is institutionalized in the field of economics. Most economists identify as either macro or micro economists. Macroeconomics is traditionally divided into topics along different time frames: the analysis of short term fluctuations over the business cycle, the determination of structural levels of variables like inflation and unemployment in the medium (i. e. unaffected by short term deviations) term, and the study of long term economic growth. It also studies the consequences of policies targeted at mitigating fluctuations like fiscal or monetary policy, using taxation and government expenditure or interest rates, respectively, and of policies that can affect living standards in the long term, e. g. by affecting growth rates. Macroeconomics as a separate field of research and study is generally recognized to start in 1936, when John Maynard Keynes published his The General Theory of Employment, Interest and Money, but its intellectual predecessors are much older. Since World War II, various macroeconomic schools of thought like Keynesians, monetarists, new classical and new Keynesian economists have made contributions to the development of the macroeconomic research mainstream.

Macroeconomics encompasses a variety of concepts and variables, but above all the three central macroeconomic variables are output, unemployment, and inflation. Besides, the time horizon varies for different types of macroeconomic topics, and this distinction is crucial for many research and policy debates. and which is often termed the natural The original version of Okun's law states that a 3% increase in output would lead to a 1% decrease in unemployment. The structural or natural rate of unemployment is the level of unemployment that will occur in a medium run equilibrium, i. e. a situation with a cyclical unemployment rate of zero. There may be several reasons why there is some positive unemployment level even in a cyclically neutral situation, which all have their foundation in some kind of market failure: Sectoral shifts and other reasons for a changed demand from firms for workers with particular skills and characteristics, which occur continually in a changing economy, may also cause more search unemployment because of increased mismatch. Efficiency wage models are labor market models in which firms choose not to lower wages to the level where supply equals demand because the lower wages would lower employees' efficiency levels In the case of employers having some monopsony power, however, employment effects may have the opposite sign.

A general price increase across the entire economy is called inflation. When prices decrease, there is deflation. Economists measure these changes in prices with price indexes. Inflation will increase when an economy becomes overheated and grows too quickly. Similarly, a declining economy can lead to decreasing inflation and even in some cases deflation. Central bankers conducting monetary policy usually have as a main priority to avoid too high inflation, typically by adjusting interest rates. High inflation as well as deflation can lead to increased uncertainty and other negative consequences, in particular when the inflation (or deflation) is unexpected. Consequently, most central banks aim for a positive, but stable and not very high inflation level.

Open economy macroeconomics deals with the consequences of international trade in goods, financial assets and possibly factor markets like labor migration and international relocation of firms (physical capital). It explores what determines import, export, the balance of trade and over longer horizons the accumulation of net foreign assets. An important topic is the role of exchange rates and the pros and cons of maintaining a fixed exchange rate system or even a currency union like the Economic and Monetary Union of the European Union, drawing on the research literature on optimum currency areas.

When the Great Depression struck, the reigning economists had difficulty explaining how goods could go unsold and workers could be left unemployed. In the prevailing neoclassical economics paradigm, prices and wages would drop until the market cleared, and all goods and labor were sold. Keynes in his main work, the General Theory, initiated what is known as the Keynesian revolution. He offered a new interpretation of events and a whole intellectural framework a novel theory of economics that explained why markets might not clear, which would evolve into a school of thought known as Keynesian economics, also called Keynesianism or Keynesian theory. When the oil shocks of the 1970s created a high unemployment and high inflation, Friedman and Phelps were vindicated. Monetarism was particularly influential in the early 1980s, but fell out of favor when central banks found the results disappointing when trying to target money supply instead of interest rates as monetarists recommended, concluding that the relationships between money growth, inflation and real GDP growth are too unstable to be useful in practical monetary policy making.

Research in the economics of the determinants behind long run economic growth has followed its own course. The Harrod Domar model from the 1940s attempted to build a long run growth model inspired by Keynesian demand driven considerations. The Solow–Swan model worked out by Robert Solow and, independently, Trevor Swan in the 1950s achieved more long lasting success, however, and is still today a common textbook model for explaining economic growth in the long run. The model operates with a production function where national output is the product of two inputs: capital and labor. The Solow model assumes that labor and capital are used at constant rates without the fluctuations in unemployment and capital utilization commonly seen in business cycles. In this model, increases in output, i. e. economic growth, can only occur because of an increase in the capital stock, a larger population, or technological advancements that lead to higher productivity (total factor productivity). An increase in the savings rate leads to a temporary increase as the economy creates more capital, which adds to output. However, eventually the depreciation rate will limit the expansion of capital: savings will be used up replacing depreciated capital, and no savings will remain to pay for an additional expansion in capital. Solow's model suggests that economic growth in terms of output per capita depends solely on technological advances that enhance productivity. The Solow model can be interpreted as a special case of the more general Ramsey growth model, where households' savings rates are not constant as in the Solow model, but derived from an explicit intertemporal utility function. In the 1980s and 1990s endogenous growth theory arose to challenge the neoclassical growth theory of Ramsey and Solow. This group of models explains economic growth through factors such as increasing returns to scale for capital and learning by doing that are endogenously determined instead of the exogenous technological improvement used to explain growth in Solow's model. Another type of endogenous growth models endogenized the process of technological progress by modelling research and development activities by profit maximizing firms explicitly within the growth models themselves. In macroeconomic models in environmental economics, the economic system is dependant upon the environment. In this case, the circular flow of income diagram may be replaced by a more complex flow diagram reflecting the input of solar energy, which sustains natural inputs and environmental services which are then used as units of production. Once consumed, natural inputs pass out of the economy as pollution and waste. The potential of an environment to provide services and materials is referred to as an "environment's source function", and this function is depleted as resources are consumed or pollution contaminates the resources. The "sink function" describes an environment's ability to absorb and render harmless waste and pollution: when waste output exceeds the limit of the sink function, long term damage occurs.

The division into various time frames of macroeconomic research leads to a parallel division of macroeconomic policies into short run policies aimed at mitigating the harmful consequences of business cycles (known as stabilization policy) and medium and long run policies targeted at improving the structural levels of macroeconomic variables. Structural policies may be labor market policies which aim to change the structural unemployment rate or policies which affect long run propensities to save, invest, or engage in education or research and development. The actual method through which the interest rate is changed differs from central bank to central bank, but typically the implementation happens either directly via administratively changing the central bank's own offered interest rates or indirectly via open market operations. Via the monetary transmission mechanism, interest rate changes affect investment, consumption, asset prices like stock prices and house prices, and through exchange rate reactions export and import. In this way aggregate demand, employment and ultimately inflation is affected. Expansionary monetary policy lowers interest rates, increasing economic activity, whereas contractionary monetary policy raises interest rates. In the case of a fixed exchange rate system, interest rate decisions together with direct intervention in the foreign exchange market are major tools to control the exchange rate. In developed countries, most central banks follow inflation targeting, focusing on keeping medium term inflation close to an explicit target, say 2%, or within an explicit range. This includes the Federal Reserve and the European Central Bank, which are generally considered to follow a strategy very close to inflation targeting, even though they do not officially label themselves as inflation targeters. In practice, an official inflation targeting often leaves room for the central bank to also help stabilize output and employment, a strategy known as "flexible inflation targeting". Most emerging economies focus their monetary policy on maintaining a fixed exchange rate regime, aligning their currency with one or more foreign currencies, typically the US dollar or the euro. Conventional monetary policy can be ineffective in situations such as a liquidity trap. When nominal interest rates are near zero, central banks cannot loosen monetary policy through conventional means. In that situation, they may use unconventional monetary policy such as quantitative easing to help stabilize output. Quantity easing can be implemented by buying not only government bonds, but also other assets such as corporate bonds, stocks, and other securities. This allows lower interest rates for a broader class of assets beyond government bonds. A similar strategy is to lower long term interest rates by buying long term bonds and selling short term bonds to create a flat yield curve, known in the US as Operation Twist.

Fiscal policy is the use of government's revenue (taxes) and expenditure as instruments to influence the economy. For example, if the economy is producing less than potential output, government spending can be used to employ idle resources and boost output, or taxes could be lowered to boost private consumption which has a similar effect. Government spending or tax cuts do not have to make up for the entire output gap. There is a multiplier effect that affects the impact of government spending. For instance, when the government pays for a bridge, the project not only adds the value of the bridge to output, but also allows the bridge workers to increase their consumption and investment, which helps to close the output gap. The effects of fiscal policy can be limited by partial or full crowding out. When the government takes on spending projects, it limits the amount of resources available for the private sector to use. Full crowding out occurs in the extreme case when government spending simply replaces private sector output instead of adding additional output to the economy. A crowding out effect may also occur if government spending should lead to higher interest rates, which would limit investment. Some fiscal policy is implemented through automatic stabilizers without any active decisions by politicians. Automatic stabilizers do not suffer from the policy lags of discretionary fiscal policy. Automatic stabilizers use conventional fiscal mechanisms, but take effect as soon as the economy takes a downturn: spending on unemployment benefits automatically increases when unemployment rises, and tax revenues decrease, which shelters private income and consumption from part of the fall in market income. Well known specific theoretical models include short term models like the Keynesian cross, the IS–LM model and the Mundell–Fleming model, medium term models like the AD–AS model, building upon a Phillips curve, and long term growth models like the Solow–Swan model, the Ramsey–Cass–Koopmans model and Peter Diamond's overlapping generations model. Quantitative models include early large scale macroeconometric model, the new classical real business cycle models, microfounded computable general equilibrium (CGE) models used for medium term (structural) questions like international trade or tax reforms, Dynamic stochastic general equilibrium (DSGE) models used to analyze business cycles, not least in many central banks, or integrated assessment models like DICE.

The IS–LM model, invented by John Hicks in 1936, gives the underpinnings of aggregate demand (itself discussed below). It answers the question "At any given price level, what is the quantity of goods demanded?" The graphic model shows combinations of interest rates and output that ensure equilibrium in both the goods and money markets under the model's assumptions. The goods market is modeled as giving equality between investment and public and private saving (IS), and the money market is modeled as giving equilibrium between the money supply and liquidity preference (equivalent to money demand). The IS curve consists of the points (combinations of income and interest rate) where investment, given the interest rate, is equal to public and private saving, given output. The IS curve is downward sloping because output and the interest rate have an inverse relationship in the goods market: as output increases, more income is saved, which means interest rates must be lower to spur enough investment to match saving. The traditional LM curve is upward sloping because the interest rate and output have a positive relationship in the money market: as income (identically equal to output in a closed economy) increases, the demand for money increases, resulting in a rise in the interest rate in order to just offset the incipient rise in money demand. The IS LM model is often used in elementary textbooks to demonstrate the effects of monetary and fiscal policy, though it ignores many complexities of most modern macroeconomic models. A problem related to the LM curve is that modern central banks largely ignore the money supply in determining policy, contrary to the model's basic assumptions. In some modern textbooks, consequently, the traditional IS LM model has been modified by replacing the traditional LM curve with an assumption that the central bank simply determines the interest rate of the economy directly.

The AD–AS model is a common textbook model for explaining the macroeconomy. The original version of the model shows the price level and level of real output given the equilibrium in aggregate demand and aggregate supply. The aggregate demand curve's downward slope means that more output is demanded at lower price levels. The downward slope can be explained as the result of three effects: the Pigou or real balance effect, which states that as real prices fall, real wealth increases, resulting in higher consumer demand of goods; the Keynes or interest rate effect, which states that as prices fall, the demand for money decreases, causing interest rates to decline and borrowing for investment and consumption to increase; and the net export effect, which states that as prices rise, domestic goods become comparatively more expensive to foreign consumers, leading to a decline in exports. In many representations of the AD–AS model, the aggregate supply curve is horizontal at low levels of output and becomes inelastic near the point of potential output, which corresponds with full employment. Since the economy cannot produce beyond the potential output, any AD expansion will lead to higher price levels instead of higher output. In modern textbooks, the AD–AS model is often presented sligthly differently, however, in a diagram showing not the price level, but the inflation rate along the vertical axis, making it easier to relate the diagram to real world policy discussions. In this framework, the AD curve is downward sloping because higher inflation will cause the central bank, which is assumed to follow an inflation target, to raise the interest rate which will dampen economic activity, hence reducing output. The AS curve is upward sloping following a standard modern Phillips curve thought, in which a higher level of economic activity lowers unemployment, leading to higher wage growth and in turn higher inflation.