Principles of Macroeconomics• http://web.mit.edu/14.02/www• Two formats:– Lecture/Rec: Ricardo Caballero, M-W 9; Rec F– All-section: M-W-F (more or lesssynchronized)• Rec:– Peter Benczur (HTA)– Andrei SarychevMacroeconomics?• Micro-economics:– individual markets– effects are limited to that market• Macro-economics:– aggregate: sum of markets plus cross effects• GDP, U, Inflation– Too complex => Take shortcuts => Art• Ambitious! Too much? Not at this levelStyle• Basic structure + some current events• Shifting toward the latter over time• Book plus:– Emerging markets; crises in Asia and LatinAmerica– Stock Market (aggregate)… U.S. crash?A Tour Around the World• US• Europe• Japan• Emerging economies• Update the book -- interesting to see the issues thatare no longer so… and the new ones.• No need to understand!Crisis-CountriesIndonesia, Korea, Malaysia, Philippines, ThailandCapital Flows (billions US$)35.162.972.9-11.0-20.0-10.00.010.020.030.040.050.060.070.080.01994 1995 1996 1997Capital Flows (% GDP)4.1%6.4%6.9%-1.8%-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%1994 1995 1996 1997Interest RatesStock PricesSource: IMF World Economic Outlook 1999Exchange Rates: (vs USD)IndustrialProductionEurobond SpreadsAcross-the-boardFall in equity prices since July 31, 1998 (real domestic currency)0 10 20 30 40 50 60CHLCOLPERMEXVENARGBRAmaximumas of
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