Macroeconomics for Business

Intermediate Macroeconomics: The Neoclassical Business Cycle Model

We previously studied equilibrium in a particularly simple world – an endowment economy. This was useful for getting intuition about what determined the real interest rate, but lacked realism. In this section we endogenize supply. The concept of equilibrium is identical to before, but the set up is more interesting. Now we have firms that produce output using capital and labor, and households t...

Intermediate Macroeconomics: The Real Business Cycle Model

Having developed an operational model of the economy, we want to ask ourselves the following two questions. First, can the model explain actual business cycle data? Second, to the extent to which it can fit the data, what are the implications for economic policy? To proceed we first have make clear what is meant by “business cycle” data. This requires briefly looking at some US macroeconomic da...

Emergent Macroeconomics An Agent-Based Approach to Business Fluctuations

Implicit Microfoundations for Macroeconomics

A large market economy has a huge number of degrees of freedom with weak microlevel coordination. The ‘implicit microfoundations’ approach considers this property of micro-level interactions to more strongly determine macro-level outcomes compared to the precise details of individual choice behavior; that is, the ‘particle’ nature of individuals dominates their ‘mechanical’ nature. So rather th...

Online Appendix A Simple Model to Teach Business Cycle Macroeconomics for Emerging Market and Developing Economies