Macro II
Introduction
Course information
•
•
•
•
5EN453, 2 Lectures (6 ECTS)
Lecturer: Pavel Potužák, Dpt. of Economics
Office hours: Thursday 13:15-15:15, NB343
Website:
http://keke.vse.cz/studium/materialy/5en45
3-macroeconomics-ii/
2
Course information
• Textbook: David Romer (2006): Advanced
Macroeconomics, 3rd edition (or higher)
• Download: kekebooks.vse.cz (psw: keke123)
• Barro: Macroeconomics (1997,2008) (Optional)
3
Course information
• Distribution of points:
40 Points for Midterm in the 8th week (12th
for ill students, or in Exam period in case of
even longer illness):
 It covers 1st part of the semester. (Solow,
Ramsey)
40 Points for Final test in the Exam period:
 It covers 2nd part of the semester (from
Diamond to NKE).
20 points for 5 Problem sets (HW).Each for 4
p.
4
Course information
•




100 points altogether:
90-100 points … 1
75-89 points … 2
60-74 points … 3
50-59 … 4+ implies 2nd attempt. Comprehensive test
covering the whole semester for 100 p. (Then you need at
least 60 points to pass.)
 0-49 … 4 (Failed)
 No Selective Excuse („Omluveno“) in this Course (only
General,i.e. all (or majority of) courses), since there will
be a wide range of terms in the Exam period.
5
The Science of Macroeconomics
• Master-economist must possess a rare combination of gifts. He
must be mathematician, historian, statesman,
philosopher—in some degree. He must understand symbols and
speak in words. He must contemplate the particular in terms of the
general and touch abstract and concrete in the same flight of thought.
He must study the present in the light of the past for the
purposes of the future. No part of man’s nature of his institutions
must lie entirely outside his regard. He must be purposeful and
disinterested in a simultaneous mood; as aloof and
incorruptible as an artist, yet sometimes as near to earth
as a politician.”
J. M. Keynes "Alfred Marshall, 1842-1924" The Economic Journal,
(Sept.,1924)
 Keynes(1936) as a father of Macroeconomics
6
The Science of Macroeconomics
• Macroeconomics, the study of the economy as a whole,
attempts to answer questions like:
 Why have some countries experienced rapid growth in
incomes while others stagnated in poverty?
 Why do some countries have high rates of inflation while
others maintain stable prices?
 Why do all countries experience recessions and
depressions and (how) can (and should?) government
policy reduce the frequency and severity of these
episodes?
7
U.S. Real GDP per capita
(2000 dollars)
9/11/2001
40,000
First oil
price shock
30,000
long-run upward trend…
20,000
Great
Depression
Second oil
price shock
10,000
World War II
0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
8
Growth rates of real GDP, U.S.
10
Real GDP
growth rate
8
6
Average 4
growth
rate 2
0
-2
-4
1970
1975
1980
1985
1990
1995
2000
9
2005
Real GDP in the Czech Republic (in 2000 prices)
mil. of CZK
3900000
3700000
3500000
3300000
3100000
2900000
2700000
2500000
2300000
2100000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
.9
6
IX
.9
6
III
.9
7
IX
.9
7
III
.9
8
IX
.9
8
III
.9
9
IX
.9
9
III
.0
0
IX
.0
0
III
.0
1
IX
.0
1
III
.0
2
IX
.0
2
III
.0
3
IX
.0
3
III
.0
4
IX
.0
4
III
.0
5
IX
.0
5
III
.0
6
IX
.0
6
III
.0
7
IX
.0
7
III
.0
8
IX
.0
8
III
.0
9
IX
.0
9
III
.1
0
IX
.1
0
III
.1
1
IX
.1
1
III
.1
2
IX
.1
2
III
.1
3
III
Business Cycle in the Czech Republic
10,0%
8,0%
6,0%
4,0%
2,0%
0,0%
-2,0%
-4,0%
-6,0%
-8,0%
12
13
CR vs. EU
GDP per head, EU27 = 100
105
100
95
90
EU 27
85
The Czech Republic
80
75
70
73,2
75,1
73
70,3 69,6
70,2 70,3
68,3
75,8 76,9
74,9
73,1
79,8 81
82,2
79,6
65
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
14
15
16
17
24
25
Kaldor's stylized facts
-The rate of growth of output per worker is roughly
constant over long periods of time, and its growth
rate does not seem to diminish
The shares of national income received by labor and
capital are roughly constant over long periods of
time
-The rate of growth of the capital stock is roughly
constant over long periods of time
-The capital/output ratio is roughly constant over long
periods of time
-The rate of return on investment is roughly constant
over long periods of time
-The real wage grows over time
The ratio of labor income to total
income in the U.S.
1
Labor’s
share
of total 0.8
income
0.6
Labor’s share of income
is approximately constant over time.
(Hence, capital’s share is, too.)
0.4
0.2
0
1960
1970
1980
1990
2000
27
28
29