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Demystifying Global Macroeconomics

Name: Demystifying Global Macroeconomics
Author: John E. Marthinsen
ISBN: 9781547401468

by John E. Marthinsen

February 2020

Intermediate to advanced

846 pages

27h 32m

English

De Gruyter

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Acknowledgments
About the Author PrefaceOverview of the textPart 1 (Chapters 1 to 5)What’s new in the third edition?
Chapter 1 Introduction to Global Macroeconomics
The BasicsThree Major Macroeconomic MarketsBusiness Uses of Macroeconomic AnalysesMacroeconomic Analysis for Economists and PolicymakersLet’s Begin!The Rest of the StoryFour Major Business Planning DocumentsConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 2 Taking an Economic Pulse
The BasicsNominal Gross Domestic ProductShortcomings of GDP as a Measure of Economic HealthCircular Flow DiagramMacroeconomic EquilibriumThe Rest of the StoryA Second Way to View Macroeconomic EquilibriumUsing the Circular Flow to Explain RecessionsHow Do Governments Actually Calculate GDP and GDI?Gross National ProductUnderground EconomiesConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 3 Labor Market Conditions
The BasicsWho Uses Labor Market Information?Measuring Employment and UnemploymentFour Types of UnemploymentStrengths and Weaknesses of Labor Market MeasuresFinal Comments on Interpreting Unemployment Rate and Employment-to-Population RatioThe Rest of the StoryOther Labor Market MeasuresIf Only I Could Be a Fly on the WallNatural Rate of UnemploymentOutsourcing, Offshoring, and ReshoringConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 4 Inflation and Real GDP
The BasicsWhat Is Inflation?Inflation MeasuresReal Versus Nominal GDPThe Rest of the StoryWeaknesses of the CPIConclusionKey PointsReview QuestionsDiscussion Question
Chapter 5 Inflation: Who Wins, and Who Loses?
The BasicsInflation Diminishes Purchasing PowerFraming the Inflation IssueDebtors Versus CreditorsBusinesses Versus WorkersGovernments Versus TaxpayersDoes Inflation Hurt Retirees?Does Inflation Hurt the Nation as a Whole?The Rest of the StoryIndexationHow to Profit from a Negative Real Interest RateCalculating Nominal Interest Rates with the Precise FormulaEstimating Market Expectations about Future InflationInflation and the Cost of Higher EducationConclusionKey TermsReview QuestionsDiscussion Questions
Chapter 6 Monetary Aggregates
The BasicsCommodity Money Versus Fiat MoneyThe Rest of the StoryReview QuestionsDiscussion Questions
Chapter 7 Financial Intermediation
The BasicsFinancial IntermediariesOverview of a Typical Bank’s Balance SheetTwo Helpful Accounting RelationshipsBank Assets, Liabilities, and Stockholders’ EquityCheck ClearingThe Rest of the StoryFinancial DisintermediationInternational Check ClearingCheck Clearing and Company Cash ManagementCauses of Bank FailuresNonperforming LoansLack of LiquidityExcessive Balance Sheet RisksDisproportionate Proprietary TradingPursuing Unprofitable Nonbank ActivitiesRisk Management MistakesExcessive Speculative Use of DerivativesRogue EmployeesRegulatory CostsBank RunsConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 8 Money Creation
The BasicsCreation of Money by a Single BankMoney Creation by the Banking SystemA More Realistic Look at Money MultipliersThe Rest of the StoryPreferred Asset Ratios and the M1 and M2 Money MultipliersConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 9 Central Banks
The BasicsFinancial Regulation Versus Monetary PolicyM2 ≡ M2 Money Multiplier × Monetary BaseGuideline #1: Above the Line/Below the LineMonetary Tools of the Central BankMonetary Tools in ActionLags in Monetary PolicySummary of “The Basics”The Rest of the StoryCentral Banking: A Balance Sheet ViewCan a Central Bank Become Insolvent?Macroprudential RegulationsMonetary Policy TargetsMonetary Effects of Central Bank Foreign Exchange Market InterventionCentral Banks Around the WorldConclusionKey PointsReview QuestionsDiscussion Questions

Chapter 10 Real Credit Markets
The BasicsClarifying Financial MarketsInverse Relationship Between Debt Prices and Interest YieldCost of Real CreditDetermining Credit’s Real Cost and Quantity Per PeriodShifts in the Supply and Demand for Real CreditReal Credit Market ExamplesThe Rest of the StoryCan Central Banks Set Interest Rates?ConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 11 The Economics of Cryptocurrencies
The BasicsLegal Tender, Fiat, Digital, and CryptocurrenciesBuying, Selling, and Using CryptocurrenciesBlockchain, Altcoins, and Enterprise Distributed Ledger TechnologyCryptocurrency Exchange Rate DeterminationCryptocurrencies and Monetary PoliciesTaxation and Government RegulationAre Cryptocurrencies “Money”?National and Central Bank Digital CurrenciesThe Future of CryptocurrenciesThe Rest of the StoryBitcoinConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 12 Real Goods and Services Markets
The BasicsAggregate Supply CurveAggregate Demand CurveMacroeconomic EquilibriumDon’t Confuse Price Level Increases with Increasing InflationSpending MultiplierApplicationsThe Rest of the StoryDemand Pull, Cost Push, and Spiral InflationShort-Run Phillips CurveHyperinflation and DeflationActual Quantity Supplied Always Equals Actual Quantity DemandedWhy Does a Nation’s Aggregate Demand Slope Downward?ConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 13 Fiscal Policy
The BasicsWhat Is Fiscal Policy?Taxes and Other Sources of Government RevenuesGovernment Deficits, Surpluses, and DebtsFiscal Multiplier, Crowding-Out, and Crowding-InGovernment SurplusesAutomatic StabilizersFiscal Policy in ActionLags in Fiscal PolicyMonetary Effects of Fiscal PolicyThe Rest of the StoryPutting Government Debt into PerspectiveA Closer Look at Monetary Effects of Fiscal PolicyGreece: Consequences of a Misestimated Fiscal MultiplierStructural Versus Cyclical Deficits and SurplusesCrowding-Out: When Is It Complete, Nonexistent, or Partial?ConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 14 Business Cycles
The BasicsWhat Are Business Cycles?How Are Business Cycles Measured?What Causes Business Cycles?The Rest of the StoryU.S. Business CyclesU.S. Business Cycles from 1947 to 2019ConclusionKey PointsReview QuestionsDiscussion Question
Chapter 15 Foreign Exchange Basics
The BasicsExchange RatesThe Foreign Exchange MarketParticipants in the Foreign Exchange MarketChecking Accounts Never Leave the CountrySpot Foreign Exchange MarketThe Rest of the StoryUnderstanding Spot Foreign Exchange QuotationsBuying and Selling Foreign Exchange: Bid and Ask RatesThe Major Segments of the Foreign Exchange MarketConclusionKey PointsReview QuestionsDiscussion Question
Chapter 16 Foreign Exchange Markets
The BasicsMeasuring a Currency’s ValueBilateral Versus Effective Exchange RatesNominal Versus Real Exchange RatesHow Are Exchange Rates Determined?What Causes Exchange Rates to Change?The Rest of the StoryInternational Exchange Rate SystemsTo Fix or Not to Fix, That is the QuestionWhat Is the European Monetary Union?Should There Be One Global Currency?ConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 17 Balance of Payments
The BasicsWhat Is the Balance of Payments?Major Parts of the Balance of PaymentsBalance of Payments IdentityNet Export IdentityThe Rest of the StoryBalance of Payments MeasuresAre Current Account Deficits Harmful or Beneficial?Frequently Asked Questions about the Balance of PaymentsThe Balance of Payments and Double-Entry BookkeepingUnderstanding IMF Balance of Payments ReportsConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 18 Putting It All Together
The BasicsThe Three-Sector Model and Common SenseIntegrating Macroeconomic MarketsConclusionKey PointsReview Questions
Chapter 19 Shocks to Nations with Flexible Exchange Rates
The BasicsEffects of Expansionary Fiscal PolicyEffects of Expansionary Monetary PolicyThe Rest of the StoryFeedback Effects in the Three-Sector ModelConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 20 Shocks to Nations with Fixed Exchange Rates
The BasicsWhy Do Nations Choose Fixed Exchange Rates?How Do Nations Fix Their Exchange Rates?Fixing Currency Values by Foreign Exchange Market InterventionEffects of Expansionary Fiscal PolicySummary of Economic EffectsGraphical Summary of Expansionary Fiscal Policy EffectsEffects of Expansionary Monetary PolicyThe Rest of the StoryBalance of Payments Accounting and Central Bank InterventionConclusionKey PointsReview QuestionsDiscussion Questions
Chapter 21 Causes, Cures, and Consequences of the Great Recession
The BasicsMeasures of Economic DevastationU.S. Housing Market and the Great RecessionFixing the Credit and Goods and Services MarketsWall Street Reform and Consumer Protection ActMore Than a Decade Later, Is Our Financial System Safer?Were U.S. Monetary and Fiscal Policies Effective?Did the Bailout Earn the U.S. Government a Return?The Next Financial CrisisParadoxes of the Great RecessionConclusionThe Rest of the StoryFannie Mae and Freddie MacSecuritization: From Mortgage Origination to Security SalesUsing Taxpayer Money to Bail Out the RichChronology of Major Events: 2007–2009Acts That Deregulated the U.S. Financial IndustryAbridged Chronology of U.S. Government Actions: 2007–2009Abridged Chronology of Federal Reserve and Federal Deposit Insurance Corporation Actions: 2007–2009Key PointsReview QuestionsDiscussion Questions
Chapter 22 Long-Term Growth and Development
The BasicsScenario PlanningEconomic Growth and DevelopmentEconomic Growth and the Importance of CompoundingGovernment’s Role in Economic DevelopmentThe Role of Natural Resources in Economic GrowthComparative AdvantageThe Rest of the StoryA Country Is Not a CompanyConclusionKey PointsReview QuestionsDiscussion Question
Chapter 23 Long-Term Inflation, Exchange Rates, and Unemployment
The BasicsPhillips Curve and the Natural-Rate HypothesisEquation of ExchangeMonetarism and the Quantity Theory of MoneyLong-Term Changes in Exchange RatesLinking Purchasing Power Parity Theory and Quantity Theory of MoneyThe Rest of the StoryHow Well Does PPP Predict Exchange Rates?Income Velocity Versus Transactions VelocityConclusionKey PointsReview QuestionsDiscussion QuestionsAppendix A List of Abbreviations
Appendix B Important Terms and Concepts
Three Fundamental International Macroeconomics Diagrams
Index

Overview

Demystifying Global Macroeconomics (DGM) provides readers with a practical, working use of international macroeconomics. For serious business and political leaders, understanding the global interconnections in economic and financial markets is crucial for making informed and well-timed decisions. DGM takes the mystery out of seemingly complex economic interactions by providing an easy-to-understand framework within which to analyze the effects of economic, social, and political shocks to a nation’s economy.

John E. Marthinsen integrates the three major macroeconomic sectors, which are the credit market, goods and services market, and foreign exchange market. The author provides the reader with contemporary examples that virtually leap off the front pages of our daily news reports and confront business managers and politicians with choices and decisions to make. For example, DGM shows how to use macroeconomic tools and a global framework to analyze the effects of:

U.S. tariffs on China and China’s tariffs on the United States

Infrastructure spending

Speculative capital outflows from nations under stress, such as Argentina and Turkey, and speculative capital inflows into safe-haven countries, such as Switzerland

Demonetization in India

Successfully fighting the opioid abuse problem in the United States

Border adjustment tax

Monetary policies

Fiscal policies

Marthinsen keeps readers visually engaged with the strategic use of figures, tables, charts, and illustrative exhibits. Demystifying Global Macroeconomics emphasizes the interaction among markets and equips readers with a macroeconomic perspective that will last (and be used) for years.

If you are adopting this book for a teaching course, please contact Stefan.Giesen@degruyter.com to request additional instructional material.

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