Macroeconomics studies the totality of economic processes and phenomena, their indicators and the interaction of economic entities and economic markets with each other.
Now let's move directly to the subject of macroeconomics.
In the scientific literature one can find various definitions of macroeconomics. Here are two of the most successful:
- 1) Macroeconomics is a branch of economic science that studies the functioning of the economy as a whole from the point of view of ensuring conditions sustainable economic growth , full employment of resources And minimizing inflation .
- 2) Macroeconomics is the science of aggregated behavior in economics.
The word “macroeconomics” consists of two words: “macro” and “economics”. “Macro” (from the Greek makros) means “big” and “economics” (from the Greek oikonomike) means “the art of housekeeping.” 2. Ivashkovsky S. N. Macroeconomics: Textbook. - M.: Delo, 2000. - p. 17
Subject of macroeconomics is the range of problems that it is designed to study.
However, there is still no complete consensus of opinion among scientists on this matter. Thus, some economists (as follows from the basic definition of macroeconomics) consider the subject three main problems: employment, inflation and economic growth. Others bring the number of major macroeconomic problems to 2-3 dozen. However, here we should probably remember the great Aristotle, who called for looking for a “golden mean” in everything and avoiding extremes. Therefore, let's highlight seven macroeconomic problems or macroeconomic "magnificent seven":
- Ш national product,
- Ш employment (unemployment),
- Ш inflation,
- Ш economic growth,
- Ш economic cycle,
- Ш macroeconomic policy of the state,
- Ш external interaction of national economies.
At the same time, it should be remembered that the object of macroeconomics research is constantly transforming, and therefore the range of problems that require ever new understanding is changing. Unlike microeconomics, the subject of study of which is very stable, macroeconomics cannot be considered a fully defined science. There are many different schools that interpret the ongoing economic processes in a very ambiguous and unique way. And although the Anglo-Saxon direction still dominates in the world of macroeconomic science, in recent decades the positions and authority of scientists from Germany, France, Italy, the Netherlands, Sweden, Japan, China and a number of other countries have significantly strengthened. There are attempts to create Russian macroeconomic science, although it should be recognized that domestic macroeconomists are only taking the first steps. 3. Galperin V.M., Grebennikov P.I., Leussky A.I., Tarasevich L.S. Macroeconomics: Textbook. St. Petersburg: Publishing house of St. Petersburg State University of Economics and Economics, 1997. - p. 8-9
Macroeconomics performs the following functions:
- - Cognitive: study, analysis and explanation of economic processes and phenomena.
- - Practical: recommendations on economic policy based on an analysis of approaches to solving macroeconomic problems.
- - Forecasting: identification and assessment of prospects for economic development and economic conditions.
- - Ideological: the formation of a certain worldview on various economic issues affecting the interests of the entire society. 4. A. G. Gryaznova, N. N. Dumnaya. Macroeconomics. Theory and Russian practice: Textbook. - M.: Knorus, 2004. - p. 14-15
Distinguish positive And normative macroeconomics.
Positive macroeconomics aims to explain the essence of ongoing economic processes and phenomena and develop recommendations for economic policy based on an analysis of real economic parameters. That is, positive macroeconomics deals with the analysis of economic facts and aims to build an economic model free from subjective judgments. The claims of positive macroeconomics can be statistically proven or disproved. For example, a typical positive judgment: “state budget revenues are directly dependent on the income tax rate.”
Normative macroeconomics expresses worldview, ideological principles, postulates and prescriptions of economic behavior, which serve as the basis for assessing the desirability of certain results of economic activity. That is, normative macroeconomics is a set of subjective judgments about how the economy should function. So, for example, statements like “the poor should not pay taxes”, “taxation should be based on a progressive scale” are normative.
Positive and normative judgments in macroeconomics are quite closely interrelated. On the one hand, positive theory serves as the basis for the selection of fundamental normative statements; on the other hand, normative postulates, under certain conditions, can serve as the basis for the creation of a new or special macroeconomic concept. In addition, in macroeconomics, due to the specifics of its subject, positive analysis is often based on subjective assessments of the initial postulates of economic development and the behavior of economic entities
The uniqueness of the subject of macroeconomic analysis determines the use in macroeconomics of concepts that are not found in microeconomics.
As generalizing indicators of the results of the functioning of the national economy for a certain period, such aggregates are used as: Keynesian account macroeconomic aggregation
- - Gross Domestic Product (GDP)
- - Gross National Product (GNP)
- - Net national product (NNP)
- - National income (NI)
- - Personal income of citizens (LD) 2. Ivashkovsky S. N. Macroeconomics: Textbook. - M.: Delo, 2000. - p. 18-24
These indicators form system of national accounts (SNA), which is an economic information system used throughout the world to describe and analyze economic activity at the macro level. SNA data are widely used by government authorities in the formation of macroeconomic policy. They are also increasingly used by entrepreneurs and managers to analyze the general macroeconomic climate and when constructing macroeconomic models, etc. In the modern world, the SNA is a universal economic and statistical language in which economists of all schools and directions, statisticians, and government officials communicate with each other , politicians, sociologists, specialists in the field of public administration, financiers, diplomats, etc.
Macroeconomics- branch of economic science that studies the behavior of the economy as one whole from the point of view of ensuring conditions for sustainable economic growth, full employment of resources, minimizing the level of inflation and balancing the balance of payments.
Economic growth is the result of relatively stable factors such as population growth and technological progress. The dynamics of these factors in the long term determines the dynamics of potential output. In the short term, the economy deviates from this main trajectory of uniform forward motion. Therefore, ensuring sustainable economic growth involves managing these cyclical fluctuations.
Management of the economic cycle in order to ensure full employment of resources and non-inflationary economic growth is carried out using tools macroeconomic policy: fiscal(or fiscal) and monetary(or monetary). Fiscal policy(including foreign trade) carried out primarily by the government, and monetary policy- mainly by the Central Bank. The coordination of short-term and long-term goals, the choice of instruments and the development of alternative fiscal and monetary policy strategies are the direct object of study in macroeconomic theory.
Chapter 1. Introduction to Macroeconomics 15
By focusing attention on the most significant economic factors that determine the fiscal and monetary policy of the state (for example, such as the dynamics of investment, the state of the state budget and balance of payments, the level of wages, prices, exchange rates, etc.), macroeconomics leaves " behind the scenes" behavior of individual economic agents - households and firms. Macroeconomic analysis involves abstracting from differences between individual markets and identifying key aspects of the functioning of an integral economic system in the interaction of goods, labor and money markets as such, as well as national economies as a whole. We are talking about mechanisms for establishing and maintaining, through fiscal and monetary policy measures, short-term and long-term general macroeconomic equilibrium(internal and external).
Microeconomics combines the theory of consumer choice and the theory of the firm. The subject of microeconomics is the mechanism for making economic decisions at the level of households and firms in given economic conditions, as well as the mechanism for the formation of these “given” conditions as a result of their joint actions. Microeconomics takes as given such variables, the dynamics of which are studied by macroeconomics. In microanalysis, consumer income is viewed primarily as a given value and the emphasis is on the distribution of household expenditures among various goods and services. On the contrary, in macroanalysis, total expenditure, total income, disposable income, consumption, etc. are themselves the subject of research. Macroeconomic factors (such as the level of market interest rates, inflation, unemployment, etc.) influence the decisions of households and firms about savings, investments, consumer spending, etc., which, in turn, determines the amount and structure of aggregate demand. Therefore, micro- and macroeconomic processes are closely interrelated.
Unlike microeconomics macroeconomics uses in his analysis aggregated values, characterizing the movement of the economy as a whole: GDP (and not the output of an individual company), the average price level (and not prices for specific goods), the market interest rate (and not the interest rate of an individual bank), the level of inflation, employment, unemployment
16 Macroeconomics
boots, etc. The main macroeconomic indicators are the growth rate of real GDP, the inflation rate and the unemployment rate.
Logical and formal mathematical modeling are actively used in both micro- and macroeconomics.
1.2. Macroeconomic models. Exogenous and endogenous variables. Stocks and flows
Macroeconomic models are formalized (logical, graphical and algebraic) descriptions of various economic phenomena and processes in order to identify functional relationships between them. Any model (theory, equation, graph, etc.) is a simplified, abstract reflection of reality, since all the variety of specific details cannot be simultaneously taken into account when conducting research. Therefore, no macroeconomic model is absolute, exhaustive, or comprehensive. It does not give the only correct answers addressed to specific countries in a specific period of time. However, with the help of such generalized models it is determined a set of alternative management methods dynamics of employment levels, output, inflation, investment, consumption, interest rates, exchange rates and others internal (endogenous) economic variables, the probabilistic values of which are established as a result of solving the model. As external (exogenous) variables, the value of which is determined outside the model, often the main instruments of the government’s fiscal policy and the monetary policy of the Central Bank are changes in the amounts of government spending, taxes and the money supply.
The multivariate ways of resolving economic problems provided by models makes it possible to achieve the necessary alternativeness and flexibility of macroeconomic policy. The use of macroeconomic models makes it possible to optimize combinations of fiscal, monetary, currency and foreign trade policy instruments, to successfully coordinate government and Central Bank measures to manage cyclical cycles.
Chapter 1. Introduction to Macroeconomics 17
due to economic fluctuations. The most promising from this point of view are models that take into account the dynamics of inflationary expectations of economic agents. Their use in macroeconomic forecasting makes it possible to reduce the risk of the phenomenon of unexpected inflation, which has the most destructive impact on the economy, as well as to mitigate the problem of distrust in the policies of the government and the Central Bank, which is one of the most difficult in macroeconomics.
Such general macroeconomic models as the circular flow model, AD-AS, Keynes cross, IS-LM, Phillips curves, Laffer curves, Solow model, etc., represent a general toolkit for macroeconomic analysis and do not have any national specificity. The values of empirical coefficients and specific forms of functional dependencies between economic variables in different countries may be specific. Any macroeconomic model should be assessed not by the criterion of its momentary “suitability” or “unsuitability” for the economy of a particular country, including Russia, but by the criterion of its usefulness in the process of understanding economic dynamics and managing its indicators.
The objective difficulty is to ensure sufficiency of prerequisites building a model from the point of view of the stated goal and avoiding erroneous conclusions for macroeconomic policy. At the same time, a model can be quite realistic, but too complex, while the simplicity of the model is one of the most important requirements for it in terms of the possibilities of its use in the research process. However, excessive simplification of the model can lead to the exclusion of significant factors from the analysis, as a result of which the conclusions will be incorrect. Therefore, the most difficult aspect of building any model is determining the range of factors that are essential for the macroeconomic analysis of a specific problem.
Along with the classification of economic variables as endogenous and exogenous Another grouping related to the way they are measured in time is also important. Variables stock can be measured only at a certain point in time and characterize the state of the object of study at a certain
18 Macroeconomics
new date - the beginning or end of the year, etc. Examples of stock include government debt, the amount of capital in the economy, the total number of unemployed, etc.
Flow variables are measured per unit of time (per month, per quarter, per year, etc.) and characterize the actual “flow” of economic processes over time: the amount of consumer spending for the year, the volume of investment for the year, the number of people who lost their jobs during the quarter, and etc.
Flows cause changes in stocks: the accumulation of budget deficits over a number of years leads to an increase in public debt; the change in the capital stock at the end of the current year compared to its value at the end of last year can be represented as a flow of net investment for the year, etc. The relationship between stocks and flows forms the basis of the original macroeconomic model of circular flows.
1.3. Circular flow model. "Leaks"
and "injections". General macroeconomic conditions
Equilibria
The basis macroeconomic The analysis contains the simplest model of circular flows (or a model of the circulation of GDP, income and expenses). In its elementary form, this model includes only two categories of economic agents - households and firms - and does not assume government intervention in the economy, as well as any connections with the outside world (see Fig. 1.1).
The diagram shows that the economy is a closed system in which the income of some economic agents appears as the expenses of others.
Firms' resource expenditures (or input costs) simultaneously represent flows of wages, rents, and other income to households. On the other hand, the flow of consumer spending forms the revenue (or income) of firms from the sale of finished products.
Chapter 1. Introduction to Macroeconomics 19
The flows of “income-expenses” and “resources-products” are carried out simultaneously in opposite directions and are endlessly repeated. The main conclusion from the model is the equality of the total sales of firms to the total income of households. This means that for closed economy(i.e. without any connections with the outside world) without government intervention, the value of total production in monetary terms is equal to the total value of household cash income.
In an open economy With government intervention, the circular flow model becomes somewhat more complex (see Figure 1.2).
When two other groups of economic agents are introduced into the model - the government and the rest of the world - then this equality is violated, since the flow of "income-expenses" creates "leaks" as savings, tax payments and imports. "Leaks"- any use of income other than for the purchase of domestically produced products. At the same time, additional funds are poured into the income-expense flow in the form of "injections" - investments, government spending and exports. "Injections"- any addition to consumer spending on products produced domestically.
The pattern of interaction between household spending decisions and firms' production decisions remains the same, although it becomes more complex: through transfers, subsidies, taxes and other economic instruments, the government regulates fluctuations in levels of production, employment and inflation.
20 Macroeconomics
If households decide to spend less, firms are forced to reduce output, which in turn leads to a decrease in total income. The level of demand for goods determines the level of production and employment, and the level of output determines the level of income of owners of factors of production, which (income), in turn, determines aggregate demand.
The main conclusion from the circular flow model is: real and cash flows occur unhindered, provided that the total expenditures of households, firms, the state and the rest of the world are equal to the total volume of production. Aggregate spending boosts employment, output, and income; from these incomes the expenses of economic agents are again financed, which are again returned in the form of income
Chapter 1. Introduction to Macroeconomics 21
to the owners of production factors, etc. (see Fig. 1.3). Cause and effect change places, and the circular flow pattern takes the form of a circuit.
If aggregate spending, which determines aggregate demand, falls, then aggregate employment and output fall, which reduces aggregate income, which in turn determines aggregate demand. Therefore, an important task of macroeconomic policy is stabilization of aggregate demand.
Representatives of different directions of macroeconomic theory have different approaches to solving this problem. Representatives Keynesian direction propose to stabilize aggregate expenditures by changing the amounts of government expenditures, taxes and money supply. Monetarists consider changing the money supply a universal means of stabilizing the economy. Within non-Keynesian approach concepts of macroeconomic management of the expectations of economic agents with slow changes in wages and prices are being developed. IN neoclassical rational expectations model prices and wages quickly respond to changes in market conditions and therefore the economy quickly stabilizes in the situation trust economic agents to the policies of the government and the Central Bank.
Basic terms
Macroeconomics Microeconomics Macroeconomic policy Aggregation
22 Macroeconomics
Macroeconomic models Endogenous (internal) variables Exogenous (external) variables Stocks and flows Circular flow model Closed economy Open economy “Leaks” and “injections”
1. Mankiw N.G. Macroeconomics. Ch. 12.
2. McConnell K., Brew S. Economics. T. 1, ch. 9.
3. Dornbusch R., Fischer S. Macroeconomics. Ch. eleven.
4. Fischer S., Dornbusch R., Shmalenzi R. Economics. Ch. 24.
5. Dolan E. Macroeconomics. Ch. 2.
6. Dolan E., Campbell K., Campbell R. Money, banking
business and monetary policy. Ch. 1.
7. Linwood T. Geiger. Macroeconomic theory and transition economy. Ch. 4, § 1.
8. Heine P. Economic way of thinking. Ch. 16.
9. Galperin V.M., Grebennikov P.I., Leussky A.I., Tarasevich L.S. Macroeconomics. Ch. 12.
Object research macroeconomics is the national economy as a whole. In reality, the national economy is always based on a certain type of production relations between many economic entities. This or that type of production relations is based on one or another form of ownership (private, collective, state). Relations between subjects, connections between them are always ordered, organized, coordinated in one way or another. Today, there are two known ways of coordinating relationships and connections: market and centralized (state regulation).
A specially ordered system of connections between economic entities constitutes an economic system. Thus, object of macroeconomics The economic system appears, naturally, at the macro level, at the level of the entire national economy.
In the economic literature, there are different approaches to the classification of economic systems.
The most effective today is a mixed economic system. It combines various forms of ownership (private, collective, state) and two mechanisms for regulating economic activity (market and state). Exactly mixed economic system and is today object studying macroeconomics.
Different forms of ownership and two regulatory mechanisms in a mixed economic system can be combined in different ways. In this regard, there is a distinction three main options for the mixed economy model:
- conservative the option provides for limited government intervention in macroeconomic processes in order to create favorable conditions for the development of private property and market levers for self-regulation of the economy;
- liberal the option involves carrying out important institutional and social reforms, achieving rational interaction between the private and public sectors of the economy, introducing a national planning system, subordinating the private sector to the interests of social development, and implementing the gradual socialization of the capitalist economy;
- social reformist the mixed economy option takes into account the need for an optimal combination of decentralism and centralism, planning and market, individual and collective forms of ownership with the aim of gradually transforming capitalism into a more progressive society.
Subject of macroeconomic science It is generally accepted to consider economic relations between subjects in the process of production, distribution, redistribution and consumption of goods and services at the level of the national economy. It seems that subject of macroeconomics can also be considered the mechanism of functioning of the national economy, the economic system at the macro level.
Functions of macroeconomics:
- educational– study of economic phenomena, processes, cause-and-effect relationships in the economy. Such research is based on facts obtained through observation, collection and processing of information. Then economic principles are defined - generalizations regarding real phenomena and processes. Since deriving principles from facts is economic analysis, this function of macroeconomics is called macroeconomic analysis;
- applied. The analysis reveals shortcomings and problems of the economic system, therefore macroeconomics can and does give recommendations on how to improve it (the system) and solve existing macroeconomic problems. This function is called macroeconomic regulation.
Macroeconomic regulation is carried out through the implementation of economic policy.
Macroeconomic policy– a system of government measures aimed at solving the main macroeconomic problems and achieving macroeconomic goals. These are:
Increase in national production volumes, economic growth;
Price stability, overcoming inflation;
Full time, incl. reduction of unemployment;
Ensuring an active trade and payments balance.
The achievement of these goals is carried out with the help of certain instruments of fiscal and monetary policy. There are also social policies, employment policies, foreign exchange policies, foreign trade policies, etc. politics.
Methods of macroeconomic analysis. Macroeconomic models and quantities
Macroeconomics is based on the principles of materialist dialectics as a general method of understanding the economic life of society. And also owns a specific method - macroeconomic modeling.
A macromodel is a formalized (logical, graphical, algebraic) description of various economic phenomena and processes in order to identify relationships and interdependencies between them.
Create a macro model means to find a function that relates endogenous and exogenous variables.
Exogenous(external) variables – their value is determined outside the model, these are the initial data.
Endogenous(internal) – the probabilistic values of which are determined during the process of solving the model.
Macroeconomics also uses aggregated values(indicators). They reflect a collection of specific economic units as if they constituted a single whole.
Macroeconomic entities are also defined according to the same principle – the principle of aggregation.
Subjects of macroanalysis speakers:
ü household sector– all private farms in the country whose activities are aimed at meeting their own needs;
ü business sector– the totality of all firms, enterprises and organizations registered within the country;
ü government sector– all government institutions and organizations;
ü sector "abroad"– the entire set of economic entities that are located outside the country, as well as foreign government institutions.
Circular flow model
Macroeconomic analysis is based on circular flow model(model of GNP circulation, model of circulation of income and expenses).
In an open economy (interacting with the outside world) with government intervention, the circular flow model takes the following form (see Figure 1.1).
The main conclusion from the model: real and cash flows occur unhindered, provided that the total expenditures of households, firms, the state and the rest of the world are equal to the total volume of production. Aggregate spending boosts employment, output, and income; from these incomes the expenses of economic entities are again financed, which again return in the form of income to the owners of factors of production, etc. If aggregate spending, which determines aggregate demand, falls, then aggregate employment and output fall, which reduces aggregate income, which in turn determines aggregate demand. Therefore, an important task of macroeconomic policy is to stabilize aggregate demand.
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MINISTRY OF FOOD AND AGRICULTURE
EE GRODNO STATE AGRICULTURAL UNIVERSITY
Department of Economic Theory
A course of lectures on the subject “Macroeconomics”.
Compiled by: department assistant
Economic theory Yakimchuk P.M.
GRODNO 2010
Topic 1: Subject and methods of macroeconomics. National economy and its structure. (4 hours).
1.1. Subject of macroeconomics.
1.2. Methods in macroeconomics.
1.3. National economy and its structure.
1.4. Main macroeconomic indicators.
1.5. National wealth.
1.6. Planning and forecasting in macroeconomics.
1.7. The role of government regulation in macroeconomics.
Subject of macroeconomics.
Macroeconomics is a special section of economic theory, which is a continuation of microeconomics and studies the functioning of the economy as a whole. The goals of macroeconomics in most countries are: maintaining full employment of resources, price stability, sustainable economic growth and minimizing inflation.
Macroeconomic analysis involves abstracting from differences between individual markets and industries, clarifying the mechanism of functioning of the economic system as a whole by maintaining macroeconomic equilibrium. This is the difference between macroeconomics and microeconomics. However, macro- and microeconomic processes are closely interrelated. Macroeconomic decisions influence the economic development of firms through savings, consumer spending, investment, etc.
Macroeconomic analysis is based on the simplest model of the circulation of products and income, the main links of which are firms and households. (See Figure 1). To satisfy their needs, households offer firms land, labor, capital, and entrepreneurial skills as resources. Firms use resources to produce goods and services. The emerging relationships are carried out in physical and monetary forms and are endlessly repeated. (The first is shown in the figure counterclockwise, the second - clockwise). The main assumption of the product and income circulation model is the equality of the amount of sales of firms and the amount of household income. Thus, income earned in the economy is correlated with output and the level of gross domestic product.
Fig.1. Economic turnover model
The presented model characterizes a closed economy in which there is no government intervention and no connections with the outside world. The integration of the national economy into the world economy, calculated through such indicators as the share of exports in production, the share of imports in consumption, the share of foreign investment, etc., shows the degree of its openness. The highest degree of openness (50 - 70%) is in countries such as Austria, Belgium, and the Netherlands. In France, Germany, Italy, the degree of openness is within 40 - 50%, in the USA, China, and India it does not exceed 20%.
The emergence of macroeconomic science dates back to the 1930s. It was founded by John Maynard Keynes (1883-1946), who in his book “The General Theory of Employment of Interest and Money” (1936) proved the possibility of a stable state of high unemployment and underutilized productive capacity in a market economy and that correct taxation The government's fiscal and monetary policies can affect production, thereby reducing
increasing unemployment and reducing the duration of economic crises. Consequently, Keynes substantiated the need for state regulation of the economy as a whole.
The subject of macroeconomic theory is behavior
economy, the system of its internal connections, considered as
one whole.
Macroeconomic theory studies:
Economic behavior, economic ups and downs,
inflation and unemployment rates;
Economic policy (changing exchange rates and
investments);
Economic factors (affecting interest rates,
prices and budget).
Macroeconomics is the basis of the state's economic policy.
National Economy – Economic Activity
economic entities on a state scale, aimed
to meet the needs of the nation.
Goals of the state's macroeconomic policy.
1. Economic growth – ensuring a sustainable trend
growth of the national product.
2.Optimal employment – providing work to everyone who is willing and able to work.
3. Price stabilization – equal efficiency for all economic entities, i.e. ensuring a stable price level,
excluding inflation.
4. Foreign trade balance – provides for foreign trade
equilibrium, balance of exports and imports, stable exchange rate
national currency exchange rate.
To achieve these goals, the following main macroeconomic policy instruments are used.
1. Fiscal policy involves the use of taxes and government spending to influence the economy.
2. Monetary policy is carried out by the state
through the country's monetary, credit and banking systems.
3. Income policy is the state’s desire to restrain
inflation by directive methods, either by controlling wages and prices, or by planning increases in wages and prices.
4.Foreign economic policy. Accounting and analysis of the country's foreign trade activities and management of foreign exchange markets.
1.2. Methods of macroeconomics.
A method is understood as a set of techniques, methods, and forms of studying the subject of a given science; specific tools for scientific research.
Macroeconomics uses both general scientific and specific research methods.
General scientific methods include:
1.method of scientific abstraction;
2.method of analysis and synthesis;
3.method of unity of historical and logical;
4.system-functional analysis;
5.economic and mathematical modeling;
6. a combination of normative and positive approaches.
The main specific method used in macroeconomics is macroeconomic aggregation, which means the combination of phenomena and processes into a single whole. The aggregation of the value characterizes market conditions and its changes (market interest rate, GDP/GNP, general price level, inflation rate, unemployment rate, etc.).
Macroeconomic aggregation extends to economic entities (households; firms (business sector); state; foreign sector (abroad) and markets (goods and services, securities, money, labor, real capital, international monetary)).
In macroeconomics, economic models are widely used - formalized descriptions of various economic phenomena and processes. Macroeconomic models allow us to abstract from minor elements and focus on the main elements of the system and their interrelations. Since models are an abstract reflection of reality, they cannot be all-encompassing.
Macroeconomics uses many models that can be classified according to various criteria:
by degree of generalization (abstract theoretical and concrete economic);
by degree of structuring (small-sized and multi-sized);
from the point of view of the nature of the relationship of elements (linear and nonlinear);
by degree of coverage (open and closed: closed - for studying a closed national economy; open - for studying international relations);
by taking into account time as a factor determining phenomena and processes (static - the time factor is not taken into account; dynamic - time acts as a factor).
In each model, two types of variables are distinguished:
1. exogenous;
2. endogenous.
The first ones are introduced into the model from the outside; they are specified before the model is built. This is the background information. The latter arise within the model in the process of solving the stated problem and are the result of its solution.
MACROECONOMIC PROCESSES AND BASIC CONCEPTS OF MACROECONOMY
Subject of macroeconomics research
Modern economic theory involves the study of problems relating to the functioning of the economy as a whole. They significantly affect every subject, since the problems of unemployment, inflation, exchange rates, economic conditions, etc. do not bypass any of us. Being a part of economic theory, macroeconomics is not a completely separate theoretical discipline; it is quite closely interconnected with microeconomic phenomena. At the same time, being an independent branch of economic theory, macroeconomics presupposes the presence of its own subject of study and range of problems under consideration. Methods of understanding the patterns of economic functioning also differ in certain specifics.
Macroeconomics- part of economic theory that studies the mechanism of functioning of the economy as a whole. It examines the interconnection of many important problems: employment, national income, inflation, exchange rate, balance of payments.
The emergence of macroeconomics as an independent discipline is associated with the name of John Maynard Keynes. The emergence of macroeconomics as an independent part of economic theory was greatly influenced by changes in the economy in the 20-30s. XX century, in particular the Great Depression. The decline in production, unemployment, the inability of the market to restore the general equilibrium in the economy - all this served as the beginning for the formation of the theory of macroeconomic processes. Macroeconomics is “woven” from solving problems that arise in the economy. In the book by J.M. Keynes “The General Theory of Employment, Interest and Money” those of them that formed the basis of research in the 40-70s were formulated. XX century The mechanism for studying macroeconomic processes consists of theoretically solving the following problems:
1. Identification of factors determining the level of employment.
2. Determination of methods to combat unemployment.
3. Study of the role of money and the factors determining the demand for money.
4. Conducting an analysis of the role of the interest rate as the main mechanism, an intermediary, ensuring the relationship between the markets of goods and money.
Modern economic theory has supplemented this list with research into the problems of economic dynamics, inflation, public debt, state economic policy, other institutions, and problems of the international economy.
Macroeconomics is quite closely related to microeconomics. As an independent branch of science, macroeconomics was formed more than half a century later than microeconomics, but there is a certain relationship between these two branches of economic theory. It is determined historically and has a practical justification. Since the time of Alfred Marshall, microeconomics has dominated economic theory, and it is automatically assumed that the principle of individual market equilibrium applies to the entire economy. The destructive consequences for the entire American economy of the Great Depression destroyed this postulate and required the justification of its own mechanism for the behavior of the economy as a whole.
In the subject and research methods of microeconomics and macroeconomics, there are significant differences.
In microeconomics, the mechanism for setting prices in a particular market is studied, consumer behavior and the motivation for making a decision on the volume of production by the manufacturer are analyzed.
In macroeconomics, two main markets are considered: the market for goods and services and the money market. However, unlike microeconomic research, macroeconomics tries to establish the mechanism of equilibrium in the economy through the general equilibrium in the commodity and money markets and through their interaction. This equilibrium, as in microeconomics, is abstract and ideal. The emergence of unemployment, inflation, public debt, and fluctuations in the volume of national production are manifestations of an imbalance. Macroeconomics largely studies the consequences of imbalances, evaluates them, and suggests ways to reduce their negative effect.
At the same time, macroeconomics is not a separate part of economic theory, divorced from microeconomics. In macroeconomics, the same subjects operate as in microeconomics: firms, households and the state. Many of their actions, the consequences of making general decisions, will affect not only the economic activity of an individual entity, but also the entire economy. For example, in the context of a general decline in production, there are no incentives for investment. For an individual firm, this means finding a new point of profit maximization in a smaller volume of production; for the entire economy, this means a further decline in national production. Households will receive more modest incomes; for the economy, this means that some of the goods produced will be unsold. Therefore, macroeconomic research also contains microeconomic problems.
In general, in macroeconomics the following main ones can be distinguished: areas of research:
1. The theory of consumption (highlights the main factor determining the dynamics of consumer spending).
2. The theory of investment decision making (answers the question of what is the motivation of private firms when making decisions about changing the volume of investment demand in the economy).
3. Theory of money (answers the questions: what determines the demand for money and what is the role of money in the modern economy).
4. Employment theory (studies the level of acceptable unemployment, the causes of involuntary unemployment, the impact of unemployment on the dynamics of GDP).
5. Theory of economic growth (determines the optimal rate of economic growth, its sources and consequences. Since the economy is developing, macroeconomics must identify the conditions for the transition of the economy to a new qualitative level, i.e., the conditions for economic growth).
6. The theory of economic cycles (examines the phases of development, their parameters, the causes of crisis phenomena).
7. Theory of economic policy (fundamental questions are resolved: should the state regulate the economy, what are the principles, methods and boundaries of state regulation of the economy).
8. Theory of international economics (studies of globalization problems).
9. Theory of transition economy (related to the formation of a “new” economy in former socialist countries).
In macroeconomics, there are certain features in the areas of research:
Any economy goes through periods of ups and downs. Macroeconomics is faced with the task of determining the conditions for general equilibrium that can occur in the economy. To do this, it is necessary to identify the relationships between the main problems: consumption, investment, government intervention, unemployment, interest rates, changes in the price level, etc. As a result, a unified mechanism for the operation of the economy must be created. It appears in macroeconomics as a concept.
The concept of the functioning of the economy should provide a solution to several problems:
F Valuation of the national product.
F Achieving optimal employment levels.
F Inflation.
F Economic growth.
F Economic cycle.
F State policy, its directions and effectiveness.
Macroeconomics as a science is represented by various schools, and the views of their representatives differ on the main problems. This is also the difference between macroeconomic research and microeconomic research. In microeconomics there are almost no fundamentally different approaches to research.
The peculiarity of research in macroeconomics is the presence of several points of view or models on the same problem. The main alternative ideas about the functioning of the economy, its problems and their solutions have been formed in various schools. The most significant theoretical concepts are:
F neoclassical;
F Keynesian;
F monetarist;
F institutional.
It is among these schools that ideas differ significantly on the issues of determining the initial premises of research, the functioning of the economy, identifying patterns of interaction between individual markets and the nature of the relationship between them, and the implementation and priorities of economic policy.