**Description:**

Modern and practical macroeconomics explained
by the expert on growth.

Chad
Jones’s *Macroeconomics* teaches students to think like modern
macroeconomists, with strong and engaging growth coverage and a more intuitive
approach to models. Praised by adopters for its clear explanations, flexible
organisation, timely case studies, data and emphasis on problem solving, *Macroeconomics*
gives students the practical tools they need to understand and analyse the
macroeconomy. This innovative text makes macroeconomics less complicated
without sacrificing rigour.

__Features:__

**A Flexible Approach that Engages Students with the Story
of Economic Growth**

Jones
introduces growth early and thoroughly to engage students with the
possibilities and power of macroeconomics. He first gives a thorough and
intuitive discussion of the production model and uses this to help students
understand differences in GDP across countries. Then in Chapters 5 and 6, he
combines the Solow model with complete, accessible coverage of the Romer model,
helping students understand growth through innovation. Though Jones covers the
long-run early in the text, the table of contents is designed to be flexible.
Instructors can choose to teach topics in the order that works best for their
students.

**Explains the Short Run with a Newer and More Intuitive
Model— ISMP**

Jones
uses the less complex but more modern ISMP short-run model that focuses on the
Federal Reserve’s role in setting interest rates. Jones also always assumes an
open economy to further simplify this approach. Since this model is easier to
teach and understand than the more traditional ISLM approach, professors can
move more quickly into teaching applications chapters of their choice.

**Current and Relevant, With Examples and Case Material
Designed to Reflect Recent Events**

Macroeconomics
can be difficult because students can’t “see” it happening like they can with
microeconomics. Jones uses current examples, data and cases to ground these
ideas in long-term trends seen in current events.

**The Best Text for Instructors Teaching with an
International Focus**

Jones
emphasises the world economy in three ways: early coverage of long-run growth,
use of the open economy in the short run and two chapters at the end of the
text on international trade and international finance.

Contents:

Preface

Acknowledgments

About
the Author

__Part 1: Preliminaries __

**Chapter 1. Introduction to Macroeconomics** •
What Is Macroeconomics? • How Macroeconomics Studies Key Questions • An
Overview of the Book • The Long Run • The Short Run • Issues for the Future •
Summary • Key Concepts • Review Questions • Exercises • Worked Exercise

**Chapter 2. Measuring the Macroeconomy** •
Introduction • Measuring the State of the Economy Production = Expenditure =
Income • The Expenditure Approach to GDP • The Income Approach to GDP • The
Production Approach to GDP • What Is Included in GDP and What’s Not? •
Measuring Changes over Time • A Simple Example: Where Real GDP Doesn’t Change •
A Second Example: Where Real GDP Changes • Quantity Indexes: Laspeyres,
Paasche, and Chain Weighting • Price Indexes and Inflation • Using
Chain-Weighted Data • Comparing Economic Performance across Countries • Summary
• Key Concepts • Review Questions • Exercises • Worked Exercise

__Part 2: The Long Run__

**Chapter 3. An Overview of Long-Run Economic Growth** •
Introduction • Growth over the Very Long Run • Modern Economic Growth • The
Definition of Economic Growth • A Population Growth Example • The Rule of 70
and the Ratio Scale • U.S. GDP on a Ratio Scale • Calculating Growth Rates •
Modern Growth around the World • A Broad Sample of Countries • Some Useful
Properties of Growth Rates • The Costs of Economic Growth • A Long-Run Roadmap
• Additional Resources • Summary • Growth Rules • Key Concepts • Review
Questions • Exercises • Worked Exercises

**Chapter 4. A Model of Production** •
Introduction • A Model of Production • Setting Up the Model • Allocating
Resources • Solving the Model: General Equilibrium • Interpreting the Solution
• Analyzing the Production Model • Comparing Models with Data • The Empirical
Fit of the Production Model • Productivity Differences: Improving the Fit of
the Model • Understanding TFP Differences • Human Capital • Technology •
Institutions • Misallocation • Evaluating the Production Model • Summary • Key
Concepts • Review Questions • Exercises • Worked Exercises

**Chapter 5. The Solow Growth Model** •
Introduction • Setting Up the Model • Production • Capital Accumulation • Labor
• Investment • The Model Summarized • Prices and the Real Interest Rate •
Solving the Solow Model • Using the Solow Diagram • Output and Consumption in
the Solow Diagram • Solving Mathematically for the Steady State • Looking at
Data through the Lens of the Solow Model • The Capital-Output Ratio •
Differences in* Y/L *• Understanding the Steady State • Economic Growth in
the Solow Model • Meanwhile, Back on the Family Farm • Some Economic
Experiments • An Increase in the Investment Rate • A Rise in the Depreciation
Rate • Experiments on Your Own • The Principle of Transition Dynamics •
Understanding Differences in Growth Rates • Strengths and Weaknesses of the
Solow Model • Summary • Key Concepts • Review Questions • Exercises • Worked Exercises

**Chapter 6. Growth and Ideas **•
Introduction • The Economics of Ideas • Ideas • Nonrivalry • Increasing Returns
• Problems with Pure Competition • The Romer Model • Solving the Romer Model •
Why Is There Growth in the Romer Model? • Balanced Growth • Experiments in the
Romer Model • Growth Effects versus Level Effects • Globalization and Ideas •
Recapping Romer • Combining Solow and Romer: Overview • Growth Accounting •
Concluding Our Study of Long-Run Growth • A Postscript on Solow and Romer •
Additional Resources • Summary • Key Concepts • Review Questions • Exercises •
Worked Exercises • APPENDIX: Combining Solow and Romer (Algebraically) •
Setting Up the Combined Model • Solving the Combined Model • Long-Run Growth •
Output per Person • Transition Dynamics • More Exercises

**Chapter 7. The Labor Market, Wages, and Unemployment **•
Introduction • The U.S. Labor Market • The Dynamics of the Labor Market •
Supply and Demand • A Change in Labor Supply • A Change in Labor Demand • Wage
Rigidity • Different Kinds of Unemployment • The Bathtub Model of Unemployment
• Labor Markets around the World • Hours of Work • How Much Is Your Human
Capital Worth? • Present Discounted Value • Your Human Capital • The Rising
Return to Education • Economic Growth and Income Inequality • Summary • Key
Concepts • Review Questions • Exercises • Worked Exercises

**Chapter 8 • Inflation **• Introduction • The
Quantity Theory of Money • Measures of the Money Supply • The Quantity Equation
• The Classical Dichotomy, Constant Velocity, and the Central Bank • The
Quantity Theory for the Price Level • The Quantity Theory for Inflation •
Revisiting the Classical Dichotomy • Real and Nominal Interest Rates • Costs of
Inflation • The Fiscal Causes of High Inflation • The Inflation Tax • Central
Bank Independence • The Great Inflation of the 1970s • Summary • Key Concepts •
Review Questions • Exercises • Worked Exercises

__Part 3: The Short Run__

**Chapter 9. An Introduction to the Short Run** •
Introduction • The Long Run, the Short Run, and Shocks • Trends and
Fluctuations • Short-Run Output in the United States • Measuring Potential
Output • The Inflation Rate • The Short-Run Model • A Graph of the Short-Run
Model • How the Short-Run Model Works • The Empirical Fit of the Phillips Curve
• Summary • Okun’s Law: Output and Unemployment • Filling in the Details •
Summary • Key Concepts • Review Questions • Exercises • Worked Exercise

**Chapter 10. The Great Recession: A First Look** •
Introduction • Recent Shocks to the Macroeconomy • Housing Prices • The Global
Saving Glut • Subprime Lending and the Rise in Interest Rates • The Financial
Turmoil of 2007- 2009 • Oil Prices • Macroeconomic Outcomes • A Comparison to
Previous Recessions • Inflation • The Rest of the World • Some Fundamentals of
Financial Economics • Balance Sheets • Leverage • Bank Runs and Liquidity
Crises • Financial Wrap-Up • Going Forward • Summary • Key Concepts • Review
Questions • Exercises

**Chapter 11. The IS Curve** •
Introduction • Setting Up the Economy • Consumption and Friends • The
Investment Equation • Deriving the IS Curve • Using the IS Curve • The Basic IS
Curve • The Effect of a Change in the Interest Rate • An Aggregate Demand Shock
• A Shock to Potential Output • Other Experiments • Microfoundations of the IS
Curve • Consumption • Multiplier Effects • Investment • Government Purchases •
Net Exports • Conclusion • Summary • Key Concepts • Review Questions •
Exercises • Worked Exercises

**Chapter 12. Monetary Policy and the Phillips Curve** •
Introduction • The MP Curve: Monetary Policy and Interest Rates • From Nominal
to Real Interest Rates • The IS-MP Diagram • Example: The End of a Housing
Bubble • The Phillips Curve • Price Shocks and the Phillips Curve • Cost-Push
and Demand-Pull Inflation • Using the Short-Run Model • The Volcker
Disinflation • The Great Inflation of the 1970s • The Short-Run Model in a
Nutshell • Microfoundations: Understanding Sticky Inflation • The Classical
Dichotomy in the Short Run • Microfoundations: How Central Banks Control
Nominal Interest Rates • Changing the Interest Rate • Why i_{t} Instead
of M_{t}? • Inside the Federal Reserve • Conventional Monetary Policy •
Open-Market Operations: How the Fed Controls the Money Supply • Conclusion •
Summary • Key Concepts • Review Questions • Exercises • Worked Exercises

**Chapter 13. Stabilization Policy and the AS/AD Framework** •
Introduction • Monetary Policy Rules and Aggregate Demand • The AD Curve •
Moving along the AD Curve • Shifts of the AD Curve • The Aggregate Supply Curve
• The AS/AD Framework • The Steady State • The AS/AD Graph • Macroeconomic
Events in the AS/AD Framework • Event #1: An Inflation Shock • Event #2:
Disinflation • Event #3: A Positive AD Shock • Further Thoughts on Aggregate
Demand Shocks • Empirical Evidence • Predicting the Fed Funds Rate •
Inflation-Output Loops • Modern Monetary Policy • More Sophisticated Monetary
Policy Rules • Rules versus Discretion • The Paradox of Policy and Rational
Expectations • Managing Expectations in the AS/AD Model • Inflation Targeting •
Conclusion • Summary • Key Concepts • Review Questions • Exercises • Worked
Exercises

**Chapter 14. The Great Recession and the Short-Run Model** •
Introduction • Financial Considerations in the Short-Run Model • Financial
Frictions • Financial Frictions in the IS/MP Framework • Financial Frictions in
the AS/AD Framework • The Dangers of Deflation • Policy Responses to the
Financial Crisis • The Taylor Rule and Monetary Policy • How Large Is the
Output Gap? • The Money Supply • The Fed’s Balance Sheet • The Troubled Asset
Relief Program • Fiscal Stimulus • The European Debt Crisis • Financial Reform
• The Aftermath of the Great Recession • Secular Stagnation • A Productivity
Slowdown? • Conclusion • Summary • Key Concepts • Review Questions • Exercises
• Worked Exercise

**Chapter 15. DSGE Models: The Frontier of Business Cycle
Research** • Introduction • A Brief History of DSGE Models • From
Real Business Cycles to DSGE • Endogenous Variables • Shocks • Features •
Mathematics and DSGE Models • A Stylized Approach to DSGE • Labor Demand •
Labor Supply • Equilibrium in the Labor Market • Using the STylized DSGE Model
• A Negative TFP Shock • A Rise in Taxes Paid by Firms • A Rise in Government
Purchases • Introducing Monetary Policy and Unemployment: Sticky Wages •
Monetary Policy and Sticky Prices • Lessons from the Labor Market in DSGE
Models • Quantitative DSGE Models • Impulse Response Functions • A Total Factor
Productivity Shock • A Shock to Government Purchases • A Financial Friction Shock
• Conclusion • Summary • Key Concepts • Review Questions • Exercises •
APPENDIX: Deriving the Labor Supply Curve

__Part 4: Applications and
Microfoundations__

**Chapter 16. Consumption** • Introduction • The
Neoclassical Consumption Model • The Intertemporal Budget Constraint • Utility
• Choosing Consumption to Maximize Utility • Solving the Euler Equation: Log
Utility • Solving for C_{today} and C_{future}: Log Utility and
B = 1 • The Effect of a Rise in I on Consumption • Lessons from the
Neoclassical Model • The Permanent-Income Hypothesis • Ricardian Equivalence •
Borrowing Constraints •Consumption as a Random Walk • Precautionary Saving •
Empirical Evidence on Consumption • Evidence from Individual Households •
Aggregate Evidence • Summary • Key Concepts • Review Questions • Exercises •
Worked Exercises

**Chapter 17. Investment** • Introduction • How
Do Firms Make Investment Decisions? • Reasoning with an Arbitrage Equation •
The User Cost of Capital • Example: Investment and the Corporate Income Tax •
From Desired Capital to Investment • The Stock Market and Financial Investment
• The Arbitrage Equation and the Price of a Stock • P/E Ratios and Bubbles? •
Efficient Markets • Components of Private Investment • Residential Investment •
Inventory Investment • Summary • Key Concepts • Review Questions • Exercises •
Worked Exercises

**Chapter 18. The Government and the Macroeconomy **•
Introduction • U.S. Government Spending and Revenue • Spending and Revenue over
Time • The Debt-GDP Ratio • International Evidence on Spending and Debt • The
Government Budget Constraint • The Intertemporal Budget Constraint • How Much
Can the Government Borrow? • Economic Growth and the Debt-GDP Ratio • High
Inflation and Default • Generational Accounting • Deficits and Investment • The
Fiscal Problem of the Twenty-First Century • The Problem • Possible Solutions •
Conclusion • Summary • Key Concepts • Review Questions • Exercises • Worked
Exercise

**Chapter 19. International Trade** •
Introduction • Some Basic Facts about Trade • A Basic Reason for Trade • Trade
across Time • Trade with Production • Autarky • Free Trade • Lessons from the
Apple: Computer Example • Trade in Inputs • Moving Capital versus Moving Labor
• The Costs of Trade • The Trade Deficit and Foreign Debt • Trade and Growth
around the World • The Twin Deficits • Net Foreign Assets and Foreign Debt •
Conclusion • Summary • Key Concepts • Review Questions • Exercises • Worked
Exercise

**Chapter 20. Exchange Rates and International Finance** •
Introduction • Exchange Rates in the Long Run • The Nominal Exchange Rate • The
Law of One Price • The Real Exchange Rate • Summary • Exchange Rates in the
Short Run • The Nominal Exchange Rate • The Real Exchange Rate • Fixed Exchange
Rates • The Open Economy in the Short-Run Model • The New IS Curve • Event #1:
Tightening Domestic Monetary Policy and the IS Curve • Event #2: A Change in
Foreign Interest Rates • Exchange Rate Regimes • The Policy Trilemma • Which
Side of the Triangle to Choose? • The Future of Exchange Rate Regimes • The
Euro Crisis • The Crisis of 2011- 2013 • Long-Term Competitiveness • Summary •
Key Concepts • Review Questions • Exercises • Worked Exercises

**Chapter 21. Parting Thoughts** •
What We’ve Learned • Significant Remaining Questions • Conclusion

Glossary

Index

About the Author:

**Charles I. Jones** is the STANCO Professor of
Economics at the Stanford University Graduate School of Business. He is also a
Research Associate at the National Bureau of Economic Research. He received his
Ph.D. from MIT in 1993. He is well known for his research and papers on
long-run economic growth. Jones is equally well known as an educator with a
gift for distilling complicated subjects down to their essence and making them
accessible to all levels of students. He is the author of* Introduction to
Economic Growth*, Third Edition (2013).

Target Audience:

Students
and academicians of economics.