In my previous post on Macroeconomics, I started with the declaration of the limits of macroeconomics. The second chapter tackles these limits in greater detail. The book begins with a review of recent advances in macroeconomic theory and micro economic thinking, before diving into some of the current debates in macroeconomics, with special reference to the United Kingdom and the United States.
Chapters two and three describe recent developments in macroeconomics, with particular reference to the United Kingdom's quantitative research programme (RAND) and the American Recovery and Reinvestment Act (ARRA). The UK and the United States are both members of the European Union. The book concludes by briefly looking at some related issues such as international macroeconomics, the role of monetary policy in economic decision making, debt and finance, globalization, and the economic multiplier effect. Part one of the book was more general in nature, covering concepts from statistical analysis, time series analysis and monetary policy.
Chapter two looks at how macroeconomics affects the United Kingdom. The main focus of this section is how different policies or actions in the UK affect other countries. For example, the Bank of England's interest rates decisions are affected by the US Federal Reserve. The focus then is on how these decisions are altered by other players such as the Bank of England, the Bank of Japan, and the European Central Bank. Another important aspect of this section relates to the evaluation of trade balances and trade policies, with emphasis on the role of Great Britain in the global economy. A further focus here is the recent global recession and the role of the G7 in preventing future recessions.
Chapter three looks at recent advances in macro-economic Theory, focusing on concepts such as Quantity Demand Management, which is used to describe how different economic policies affect the level of aggregate demand. Other concepts in this section relate pricing to demand, explaining why different economies experience differing inflation expectations. Some additional research includes a short discussion of capital economics.
Chapter four looks at macro economic indicators and examines recent and future UK economic performance against some different macroeconomic indicators. The emphasis in this chapter focuses on trying to interpret and predict future economic performance. This includes looking at the forecast for the Office for Budget Responsibility (OBR), which is the government body responsible for the budget. Other topics include the outlook for financial markets, including interest rates and consumer attitudes towards borrowing. The book concludes with a look at some possible future changes in UK macroeconomics.
The fifth chapter looks at modern macroeconomic concepts. It includes a brief survey of the main modern macroeconomic concepts and their historical origins. The book then briefly reviews recent research on macro economic concepts, discussing alternative views on how to evaluate macroeconomic policies. The last part of . . . . . . this chapter presents some of the major research findings from economics and makes a few suggestions on how the future of macroeconomics may play out. The book ends with a forward outlook towards the future, looking at issues such as deflation and stagflation. It also identifies three challenges that the UK economy currently faces.