Macroeconomics

The only Intermediate Macroeconomics text to provide substantive content on the economic crisis.The current economic crisis is the worst since the Great Depression: the events themselves and the actions by the Fed and Treasury Department are equally unprecedented. Macroeconomics: Economic Crisis Update contains two brand-new chapters that directly address the crisis and present it in terms of the short-run models used in macroeconomics. Two complete chapters that describe the current economic crisis and analyze it using the short-run models A new chapter gives an overview of the events of the crisis, discussing at length the collapse of the U.S. housing market, the world savings glut, subprime lending, the packaging of mortgage-backed securities by the major investment banks, and the beginning of the current recession. The final section of this chapter presents important discussions on bank balance sheets and the role that leverage has played in the crisis and closes by describing the bank runs that beset the financial system in the first months of the crisis. A second new chapter analyzes the economic crisis using the short-run models presented in the text--IS/MP and Aggregate Supply/Aggregate Demand. The key innovation is the addition of a "risk premium" to the IS/MP and Aggregate Supply/Aggregate Demand models that explains the devastating separation that has occurred between the interest rate set by the Fed and the interest rate being charged in the economy itself. The chapter also discusses the dangers of deflation, policy responses to the crisis, monetary policy, money supply, the Fed's balance sheet, how to repair the financial system, and the fiscal stimulus program. Modern treatment of growth theoryMacroeconomics is the only undergraduate textbook to present substantial coverage of the Romer model. Jones draws on his experience as a teacher and textbook author to convey modern growth theory in a way that is accessible to undergraduates. Jones writes clearly and simply, with an engaging, conversational style that puts students at ease. When introducing math, he presents it in a careful, patient manner. Worked exercises reflect a focus on problem solvingMost chapters of Macroeconomics include worked exercises that walk students step-by-step through the process. These worked exercises prepare students for the extensive end-of-chapter problems. Innovative short-run modelShort-run chapters emphasize central banks that set interest rates in forming monetary policy. A simple open-economy model is considered from the start, and globalization (international trade and international finance) is a key theme of the applications chapters. The extreme nature of the crisis has caused the Fed to take actions never previously imagined, and those are described and analyzed in the new Chapter 14, "The Global Financial Crisis and the Short-Run Model."