Macro_L0_Introduction.pdf - Macroeconomics Introduction Chien-Chiang Wang March 1 2018 1 46 Why Should We Care about Macroeconomics 2 46 Why Should We

Macro_L0_Introduction.pdf - Macroeconomics Introduction...

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Macroeconomics: Introduction Chien-Chiang Wang March 1, 2018 1 / 46
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Why Should We Care about Macroeconomics? 2 / 46
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Why Should We Care about Macroeconomics? 3 / 46
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Why Should We Care about Macroeconomics? 4 / 46
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GDP (Gross Domestic Product) I GDP: I The measure of aggregate economic activities of a countery I The quantity of goods and services produced during some speci°ed period of time I Taiwan GDP (1999Q1 ° 2017Q4) 1500000 2000000 2500000 3000000 3500000 4000000 4500000 1999 2002 2005 2008 2011 2014 2017 TW GDP (million TWD) 5 / 46
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Stock Index 0 2000 4000 6000 8000 10000 12000 1999 2002 2005 2008 2011 2014 2017 Stock Index 6 / 46
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GDP: Trend and Cycle 1500000 2000000 2500000 3000000 3500000 4000000 4500000 1999 2002 2005 2008 2011 2014 2017 TW GDP (million TWD) 7 / 46
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GDP and Stock Index The stock index is highly correlated with the ±utuation of GDP 0 2000 4000 6000 8000 10000 12000 -450000 -350000 -250000 -150000 -50000 50000 150000 250000 1999 2002 2005 2008 2011 2014 2017 TW GDP (Detrended) Stock Index (Right Axis) 8 / 46
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GDP and Unemployment Rate 2 3 4 5 6 7 8 -450000 -350000 -250000 -150000 -50000 50000 150000 250000 1999 2002 2005 2008 2011 2014 2017 TW GDP (Detrended) Unemployment Rate 9 / 46
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US GDP and Taiwan GDP -800.000 -600.000 -400.000 -200.000 0.000 200.000 400.000 600.000 -450000 -350000 -250000 -150000 -50000 50000 150000 250000 1997 2000 2003 2006 2009 2012 2015 TW GDP (Detrended) US GDP (Detrended) 10 / 46
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Course Objectives I To understand how the economy works at aggregate level, and how total output, employment, prices, and interest rates are determined I To explore the factors underlying economic growth, business cycles, unemployment and in±ation I To acquire the ability to assess the e/ects of government policies and outside shocks on these features of the economy 11 / 46
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Contact Information I Instructor: Chien-Chiang Wang I O¢ ce: Social Sciences Building 764 I E-mail: [email protected] I O¢ ce hours: Tuesday: 2pm ° 4pm I TA I E-mail: [email protected] I O¢ ce: Social Sciences Building 653 I TA o¢ ce hours: Wednesday: 10am ° 12am 12 / 46
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Course Requirement I Grades: I Miterm (40%), Final (40%) I Assignments (20%) I Class performance (bonus) I Midterm: April 26 th I Final: June 28 th 13 / 46
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Why Macroeconomic Models? 14 / 46
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A Simple Economic Model I Equilibrium price p : Demand = Supply Q * P * Price Quantity Demand Supply Equilibrium 15 / 46
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Partial Equilibrium V.S. General Equilibrium I Goods demand = Q D ( p ; w , M ) I Goods supply = Q S ( p ; w , A ) I Eearthquake! A # Price Quantity I Good Price p " 16 / 46
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Partial Equilibrium V.S. General Equilibrium I Goods demand = Q D ( p ; w , M ) I Goods supply = Q S ( p ; w , A ) I Eearthquake! A # Price Quantity I Goods Price p " 17 / 46
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Partial Equilibrium V.S. General Equilibrium I Labor supply = L S ( w + ; p ± , M ± ) I Labor demand = L D ( w ± ; p + , A +) I Earthquake! A # Price Quantity Wage Labor I Wage decreases w # 18 / 46
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Partial Equilibrium V.S. General Equilibrium
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