Book contents
PREFACE: WHAT IS AN ANTI-TEXTBOOK?
Why it matters
Why not just teach the alternative views?
This book is not anti-mainstream economics
Who is this book intended for?
Acknowledgments
About the author
PART 1
INTRODUCTION
1 WHAT IS MACROECONOMICS?
1 THE STANDARD TEXT
1.1 Three ways in which macro differs from micro
1.2 The business cycle (and other important concepts)
1.3 Long-run growth
1.4 Inflation and deflation
1.5 The open economy
2 THE ANTI-TEXT
2.1 Why macroeconomics is necessary: the fallacy of composition
2.2 Why is the fallacy of composition is downplayed in mainstream textbooks?
2.3 The birth of modern macro: the Great Depression
2.4 Classical economics and the Keynesian breakthrough
2.5 Keynes’s General Theory
2.6 Digging deeper into the paradox of thrift
2.7 Schools of thought within macroeconomics
2.8 The great moderation
2.9 Final remark
2 MEASUREMENT, MISMEASUREMENT AND OMISSION
1 THE STANDARD TEXT
1.1 Measuring output
1.2 Measuring real output
1.3 Real GDP, measurement issues, and economic well-being
1.4 Price indices and the inflation rate
1.5 The unemployment rate
2 THE ANTI-TEXT
2.1 Introduction: conspiracy Theories and fake news
2.2 The measurement of inflation
2.3 The measurement of unemployment
2.4 The significance of unemployment
2.5 The measurement of value-added
2.6 GDP as a measure of well-being
2.7 The measurement of investment
2.8 Conclusion
PART 2
LONG-RUN ECONOMIC GROWTH
3 GROWTH: WHAT WE KNOW AND WHAT WE DON’T
1 THE STANDARD TEXT
1.1 Introduction
1.2 The crucial importance of productivity
1.3 The production function and growth accounting
1.4 What about natural resources?
1.5 Public policy: savings and investment
1.6 Two implications of diminishing returns
1.7 Other public policy measures to stimulate growth
1.8 Is world population sustainable?
1.9 Resources and the environment
1.10 Conclusion
2 THE ANTI-TEXT
2.1 The extent of our ignorance
2.2 Debunking the aggregate production function
2.3 Critical evaluation of textbook policies to promote growth
2.4 Is world population growth sustainable?
2.5 Sustainability: the doomsters versus the growth men
2.6 The climate emergency
2.7 Summary
4 GROWTH: HAPPINESS AND INEQUALITY
1 THE STANDARD TEXT
2 THE ANTI-TEXT
2.1 Does more income make us happier?
2.2 The effects of inequality on growth
2.3 The effects of inequality on well-being
2.4 Increasing inequality and its causes
2.5 Inequality and the dynamics of capitalism: Piketty’s analysis
2.6 Conclusion
5 THE FINANCIAL SYSTEM: THE BELLY OF THE BEAST
1 THE STANDARD TEXT
1.1 Introduction
1.2 Financial markets
1.3 The efficient market hypothesis
1.4 Financial institutions
1.5 Savings and investment in a closed economy
1.6 The market for loanable funds in a closed economy
1.7 Using the loanable funds model to evaluate public policy
1.8 Savings and investment in an open economy
1.9 The market for loanable funds in an open economy
1.10 Inflation and interest rates
1.11 Summary
2 THE ANTI-TEXT
2.1 Introduction
2.2 Macroeconomic instability and the financial system
2.3 Minsky’s financial instability hypothesis
2.4 Minsky’s super-cycle in the United States
2.5 A critique of the EMH
2.6 The loanable funds market: information and efficiency
2.7 The financial industry is too big
2.8 The truth about savings
2.9 The truth about investment
2.10 Concluding remarks
APPENDIX: THE VALUE OF A PERPETUITY
PART 3
SHORT-RUN FLUCTUATIONS
6 SHORT-RUN MACRO MODELS: A REVOLUTION THAT MISFIRED 141
1 THE STANDARD TEXT
1.1 Introduction
1.2 The AE model
1.3 Understanding stability
1.4 Understanding equilibrium
1.5 Unpacking planned AE
1.6 The multiplier effect in a simplified model
1.7 Aggregate demand
1.8 Short-run aggregate supply
1.9 Long-run aggregate supply
1.10 Equilibrium and stability in the AD–AS model
1.11 Supply shocks pose a policy dilemma
1.12 Conclusion
2 THE ANTI-TEXT
2.1 Is mainstream macro any different to classical economics?
2.2 Probing the slope of the AD line
2.3 An upward sloping AD line and the self-correcting economy
2.4 Corridors of stability
2.5 Conclusion
7 FISCAL POLICY: WHY DEFICITS AND DEBT MIGHT NOT MATTER
1 THE STANDARD TEXT
1.1 Introduction
1.2 Income-expenditure multipliers allowing for taxes and imports
1.3 Automatic stabilizers
1.4 The cyclically adjusted budget
1.5 Factors that reduce the size of the income-expenditure multiplier
1.6 Supply-side effect of taxes
1.7 Timing problems when using discretionary fiscal policy
1.8 Long-run issues: deficits and debt
1.9 Concluding thoughts: fiscal policy versus monetary policy
2 THE ANTI-TEXT
2.1 Introduction: the lack of a consensus
2.2 The problem of evidence: the stimulus debate of 2009
2.3 The problem of evidence: Ricardian equivalence
2.4 The problem of evidence: the austerity debate of 2010
2.5 The effects of austerity on output and debt
2.6 The necessity for government deficits in a “real balance sheet” recession
2.7 Does the national debt ever need to be paid off?
2.8 The MMT view on debt and deficits
2.9 Timing issues
2.10 Supply-side effect of taxes
2.11 Conclusion
APPENDIX: DEBT DYNAMICS
8 MONEY AND BANKING: CRONY CAPITALISM AND THE CORRUPTION IT BREEDS
1 THE STANDARD TEXT
1.1 What is money?
1.2 Banking
1.3 Government oversight of banks
1.4 How banks create money
1.5 Central banks
1.6 Monetary policy tools
1.7 Interest rate targets versus money supply targets
1.8 The financial crisis of 2007–8
1.9 What actions were taken
1.10 Financial reform in the United States
1.11 Conclusion
2 THE ANTI-TEXT
2.1 What is money?
2.2 Why does the quantity of money matter?
2.3 Banking irregularities: the incompetent, the immoral, and the illegal
2.4 Criminal wrongdoing
2.5 Why did no big bank CEOs go to jail?
2.6 The economic contribution of the financial sector
2.7 Evaluating the renewed regulation
2.8 A brief assessment of the bailouts
2.9 Conclusion
APPENDIX 1: MAJOR BANK SCANDALS REVEALED SINCE THE SUBPRIME MELTDOWN
APPENDIX 2: THE WALL STREET -WASHINGTON REVOLVING DOOR (GS DENOTES GOLDMAN SACHS)
9 MONETARY POLICY: THE FIXATION ON INFLATION
1 THE STANDARD TEXT
1.1 The liquidity preference model
1.2 Longer-term interest rates
1.3 The monetary transmission mechanism
1.4 Monetary policy and stabilization policy
1.5 Inflation targeting
1.6 The zero lower bound and quantitative easing
1.7 Monetary neutrality: output and prices in the long run
2 THE ANTI-TEXT
2.1 The limits of conventional monetary policy
2.2 The limits of QE
2.3 The limits of other monetary policy options
2.4 The fundamental problem of inflation targeting
2.5 The need for a dual mandate
2.6 The need for a green mandate!
2.7 Long-run monetary neutrality: the quantity theory rides again!
2.8 Conclusion
10 INFLATION AND UNEMPLOYMENT: THE POLITICAL ECONOMY OF UNEMPLOYMENT
1 THE STANDARD TEXT
1.1 The Phillips curve
1.2 Lipsey’s (1960) micro-underpinning to the Phillips curve
1.3 The Phillips curve as a dynamic aggregate supply curve
1.4 What determines the long-run inflation rate?
1.5 Accelerating inflation
1.6 The standard Phillips curve in inflation-unemployment space
1.7 The determinants of the NRU
1.8 Explaining historical observations of inflation and unemployment
1.9 The costs of disinflation
1.10 The danger of deflation
1.11 Hyperinflation: cause and cure
1.12 Conclusion
2 THE ANTI-TEXT
2.1 The possibility of a nonvertical LRPC
2.2 The possibility of not enough jobs
2.3 The possibility of fragile equilibria
2.4 The NRU assumes an irrelevant and inappropriate market structure
2.5 Evidence on the NRU: problems predicting inflation and deflation
2.6 Evidence on the NRU: wild gyrations of the NRU
2.7 Alternatives to the neoclassical consensus #1: a post-Keynesian view
2.8 Alternatives to the neoclassical consensus #2: Roger Farmer’s view
2.9 Alternatives to the neoclassical consensus #3: Richard Lipsey’s new view
2.10 Achieving genuinely full employment
2.11 Conclusion
PART 4
CONCLUSION
11 SUMMING UP
1 The Overemphasis On Perfectly Competitive Markets
2 Hysteresis And Multiple Equilibria
3 The Misfiring Of The Keynesian Revolution
4 The Emphasis On Long-run Equilibrium
5 The Neglect Of Uncertainty
6 The Addiction To Growth
7 Blindness To Our Challenges8 A FINAL COMMENT
POSTSCRIPT: CLIMATE CHANGE, THE COVID PANDEMIC, AND GENUINELY FULL EMPLOYMENT
Notes
References
Index