Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Macroeconomic theory - Essay Example

Comments (0) Cite this document
The central puzzle of human history is to account for the widely divergent paths of historical change. How have societies diverged What accounts for their widely disparate performance characteristics . Although we do observe some convergence . the gap between rich and poor nations, between developed and underdeveloped nations, is as wide today as it ever was and perhaps a great deal wider than ever before…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful
Macroeconomic theory
Read TextPreview

Extract of sample "Macroeconomic theory"

Download file to see previous pages One consistent theme that emerges from current research is that the growth of real income and the overall macroeconomic stability - both internal and external - are mutually interdependent and both form an integral part of an adequate, consistently sustained process of economic development. The simple policy rules that follow are:
This paper will attempt to address the second question, i.e. what distinguishes the countries that followed the optimal policy mix and hence succeeded from those which did not. Perhaps it is useful at this juncture to refer to the experience of the successful countries of Asia. Clearly the vast majority of developing economies have failed to lift their economic growth and living standard compared with a small group of Asian economies which excelled. In little over two decades the dynamic Asian economies were able to catch up their former colonial masters while others stagnated. Two distinguishing economic features of these successful economies stand out:
The neo-classical economists...
Two distinguishing economic features of these successful economies stand out:
* openness or "neutral" trade regime; and
* active government intervention.
The neo-classical economists (e.g. Balassa, 1968; Bhagwati, 1978; Krueger, 1978; Little, 1979) emphasize the role of openness. On the other hand, there is a body of literature (e.g. Amsden, 1989; Lee, 1992; Sach, 1987; Wade, 1990) which emphasizes the role active government intervention played in achieving late industrialization. While both have some elements of truth, over-emphasis of one or the other misses important issues. For example, the neo-classical economists are at unease with the co-existence of high import protection with export orientation, and active government non-price interventions with market-oriented policies in some of these economies. On the other hand, the "statists" explanation of why in these economies state interventions did not go fatally wrong as in other developing countries depends crucially on the state being "strong". More fundamentally, though, they cannot explain how a "strong" state emerges, and why some strong dictators (e.g. Marcos or Idi Amin) did not maintain macroeconomic stability and wrecked their economies. One important shortcoming of both explanations is an inadequate focus on institutions. None of these approaches takes into account the formal and informal constraints and rigidities in which policy making occurs. This chapter reflects on institutional frameworks that are likely to induce optimal macroeconomic policy response by the government.
Institutions and organizations
Nobel Laureate economist, Douglas North (1990, p. 4) defines institutions as "any form of ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Macroeconomic theory Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from
(Macroeconomic Theory Essay Example | Topics and Well Written Essays - 750 Words)
“Macroeconomic Theory Essay Example | Topics and Well Written Essays - 750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Macroeconomic theory

Macroeconomic Stabilisation Theory and Policy

” A labour market is generally a market where the services of labour factors of production exchange hands. From a macroeconomics’ point of view, it is a very critical factor that impacts on the overall markets of factors of production. In line with the same definition, it should be noted that in the short-run wages remain rigid and this is among other predicaments in the same short-run. In the short-run, therefore, equilibrium remains an illusion. Over-employment and under-employment remain the order of the day in the short-run. (, 2008) Castles, in his book, states that aggregate supply of labour is usually a function of the trade-off between leisure and income. It involves the effects of substitution and the income o...
8 Pages(2000 words)Essay

Macroeconomic Theory ECON302

... Macroeconomic Theory Question The Keynesian Income Model According to the basic Keynesian model of income, income is the soledeterminant of the demand, unless there is government spending. This implies that the level of disposable income possessed by private individuals with an economy will ultimately determine the level of consumption and savings (Salant, 72). Therefore, the private individual disposable income forms the total income, when there is an absence of government spending in that economy. Keynes argue that aggregate demand is the sole cause of instability in the business cycle and consequently the economy, and observes that it is through government intervention that such instability can be applied to stabilize the business...
5 Pages(1250 words)Essay

Unemployment in Macroeconomic Theory

... College Unemployment Unemployment is an issue that has been affecting many people in the society. It has caused many challenges in most countries more especially in developing countries. It is high time to understand deeply the meaning of this issue and its possible causes. Despite unemployment being an issue in the society, it has also been a big problem in macroeconomics. In macroeconomics, unemployment is viewed as the central issue. This is because market economy cannot stay for a long time if unemployment rate goes high. Unemployment is viewed occur mainly from the labor markets. Therefore, a big question is what are the types of unemployment in macroeconomics? What are the main causes of these types and the possible solutions...
6 Pages(1500 words)Essay

Does more calculus improve student learning in intermediate micro and macroeconomic theory

...and macroeconomics theory The question seems important to improve the student performance in economics theory. This will also help in understanding why the student with poor calculus understanding finds it hard to grasp the concepts in micro and macroeconomic theory. The calculus itself is a very vast topic categorized in to two parts the differential and integral calculus. Which of these two parts share close proximity with economics theory The undergraduate economics prerequisite should be specifically for differential or integral or for both In the following paragraphs I intend to address this question of significance of calculus...
10 Pages(2500 words)Essay

Pricing Theory and Macroeconomic Factor

Pricing is important in marketing as it determines how a product or service will be accepted in the market. It is one of the most valuable four variables that are used in the marketing mix which are used to develop a business plan. This means that it is central to the operation of a profit-oriented firm. (McNamara 2007, P. 61)
As we have seen, pricing is one of the four factors that are used in the marketing mix of a firm and which is central to the development of a viable business plan. In this regard, pricing is an important aspect of the market which has been as central to marketing. This is because the main aim of marketing is to take the production to as many customers as it can at the most affordable price that they can...
11 Pages(2750 words)Term Paper

Macroeconomic Theory and Policy

... in terms of gold (Evans & Seppo 2007, p. 89). 3.0. ‘Stagflation’ and why did it help bring the ‘Golden Age of Keynesianism’ to an end Stagflation in economics describes the situation when the rate of inflation is high leading to slow rates of economic growth and high rates of unemployment. This results when economy is stagnant increasing the rates of inflation. The situation raises economic policy dilemma as a result of exacerbation of unemployment by decreasing the rates of inflation. In version of the Keynesian macroeconomic theory dominant during the late 1970s and at the end of World War II, recession and inflation were regarded to be mutually exclusive with relationship between them described by Phillips curve. Kaldor proposed...
4 Pages(1000 words)Essay

A macroeconomic Theory of the Open Economy, Supply and demand for Loanable Funds and for Foreign-Currency Exchange

... A macroeconomic Theory of the Open Economy, Supply and demand for Loanable Funds and for Foreign-Currency Exchange In economics theory, a market for loanable funds is a place where the savers and demanders together also where money in the financial institutions like commercial banks and the lending institutions are brought together for consumers who include the households and firms to use the to meet their expenditures as consumption and investment. Money from all the institutions meet and enable the conduction of economic activities (McConnell, Campbell, Brue and Stanley 96- 122). Those entities that save as the consumers, provide the loanable funds to the demanders by either buying bonds an activity that transfers their money to bond...
15 Pages(3750 words)Essay

Analyse or evaluate macroeconomic problem using appropriate macro economic theory. (no keynsian cross or IS-LM model)

... governmental bodies. References Alpanda, S., Honig, A., & Woglom, G. R., 2011. Extending the textbook dynamic AD-AS framework with flexible inflation expectations, optimal policy response to demand changes, and the zero-bound on the nominal interest rate. Optimal Policy Response to Demand Changes, and the Zero-Bound on the Nominal Interest Rate. Asada, T., Chiarella, C., Flaschel, P., & Franke, R. (2012). Monetary macrodynamics (Vol. 127). London: Routledge. Buttet, S., & Roy, U., 2011. Deflation, Depression, and the Zero Lower Bound. Chiarella, C., Flaschel, P., & Semmler, W., 2011. Reconstructing Keynesian Macroeconomics Volume 1: Integrated Approaches. London: Routledge. Ghosh, S., & Ghosh, S., 2012. Teaching dynamic aggregate supply...
10 Pages(2500 words)Essay

Bandura's Philosophy Theory

His memories are an accumulation of yesterdays. In yesterday's are written his dealings to others and to himself. He finds life more meaningful in the lives of others. His reason for living is to serve others because he learns more of himself by dealing, relating with and loving others. Hence his motto in life is: “Do to others what he wants others to do to him.”

Bandura’s theory confirms the reality of the experience. A man needs mirroring of others to tell him whether what he is doing is fine or not. The wife is the best critic of the husband and vice versa. This is what makes marriage a wonderful ground for discovery for the two is made into one yet uniqueness of each is still there.

7 Pages(1750 words)Coursework

Securitisation and the International Relations Theory

The other aspects under investigation in this paper are the importance of the notion of security to the theory of international relations and its application to the facilitation of the process of international communication.

There exist several theories of security, which will be regarded in this paper. Among them is traditional security theory, which is regarded as the realist construct of security under which the object of security is the state and was applied during the period of the Cold War. Later this type of security evolved into human security, which is concerned more with the security of the single individual rather than the security of the state. I will present several theories of securitization and see how th...
14 Pages(3500 words)Assignment

International Trade Theory

 Further to this, it is also believed that international trade can bring substantial economic welfare to the countries however still most of the countries do not view it as a favorable thing. Despite having a very promising and bright outlook, international trade has been largely viewed with suspension and it is because of this that governments impose barriers to restrict international trade. There can be many reasons behind this act of imposing restrictions or blocking international trade however there are also benefits on the other side too.

International trade has driven the attention of many of the brilliant minds in economics therefore the origins of the economic theory on international trade owe much to the c...
6 Pages(1500 words)Case Study

Social Theory in a Globalizing Age

A comparison between the followers of social theories and the followers of natural sciences (physics and chemistry) revealed that unlike followers of natural sciences social theorists don’t use any techniques to show the exact knowledge or skill. Instead, they prove their work or idea by suggesting a possible way of explaining the facts or arguments usually called hypotheses (Lemert, 2004).
By hypotheses, social theorists cannot easily prove their argument at a time but they require time to prove it. Social theorists are normally criticized for using the hypotheses. Deconstructionists or postmodernists, rigidly critical theorists, disagree with the criticism by mentioning that any research methodology is not 100% pure a...
10 Pages(2500 words)Assignment

Contemporary American Catholic Homiletic Theory and Practice

...Overview of Contemporary American Catholic Homiletic Theory and Practice Luke 4:16-21 The foundation moment in Christian preaching is written in Luke4:16-21, when Jesus went into the synagogue in Nazareth and stood up to read the scroll of the prophet Isaiah “and he begun by saying to them, ‘today this scripture is fulfilled in your hearing’”. (Luke 4:21) Upon the ripening of time, Jesus stood at that moment as the prophetic speaker proclaiming God’s scriptural Word, declaring the fulfillment of the prophecy in Isaiah in his person. He spoke in revelation of the fulfillment of written words to a congregation, laying down the foundation of Christian preaching that has since been the basic implement in the sustenance and propagation...
6 Pages(1500 words)Case Study

The Extent to Which Unemployment Is a Microeconomic As Opposed To a Macroeconomic Problem

...Explain the extent to which unemployment is a microeconomic as opposed to a macroeconomic problem, and discuss the relevance of this analysis for government policy to reduce the rate of unemployment. Name: Roll No: Class: Subject: Teacher: Date: 26th April 2009 University Explain the extent to which unemployment is a microeconomic as opposed to a macroeconomic problem, and discuss the relevance of this analysis for government policy to reduce the rate of unemployment. Introduction One important goal of microeconomics is to analyse market mechanisms, which establishes relative prices of goods and services and allocation of resources limited by nature among the alternative uses of these goods and services. Microeconomics steps in when...
6 Pages(1500 words)Assignment

Macroeconomic Theory

...Question 1 (a): According to macroeconomic theory, the relation between exchange rates and interest rates is based on the no arbitrage policy. This policy basically states that any asset that is available in the global must be available at the same price in the world regardless of the currency of exchange. Therefore, an apple which is available in Japan must be the same value in Japanese yen as it world in the U.S. in dollars. This same rationale is applicable to the securities market as well as the services market. Therefore, one could say that if i1 is the interest rate in country 1 and i2 is the interest rate in country two with the exchange rate between the countries being Ex1; then, the following identity must hold. (1 + i1) = (1...
16 Pages(4000 words)Assignment

Free Cash Flows Theory

These are not hard and fast rules in determining the capital structure which should best affect a firms value. These theories lay down the benefits and the costs when a firm chooses what it sees as an adequate mix to maximise the shareholders value.

One of the implications where this research can lead include the possibility of the effectiveness in maximising shareholder value by employing two or more theories in capital structure decisions. Because these theories are more conditional by nature, probing which combinations when used for capital structure decisions are more effective in arriving at the goal of maximising firm value can be another subject for further research.
The role of capital structure in increasi...
11 Pages(2750 words)Case Study

Hybrid Leadership: A Theory of Action

The challenge that is brought upon us by the status quo is a function of many factors. The budget is among them. Instruction quality is both a result and a contributor—and many more. Nevertheless, not all factors are immutable. There are still some that may be manipulated to produce a better outcome. We will do so through effective educational leadership.

It is best to start by evaluating the leadership practices we are employing all these years. As we favor the Kaizen philosophy, this is an opportune time to revisit our former approach to leadership then compare it with today’s practices and procedures with a rethink of our leadership styles so as to equip our organization with what it needs to move forward...
7 Pages(1750 words)Case Study

Intermediate Macroeconomics and Macroeconomic Coordination

...CHAPTER 04 (MACROECONOMIC COORDINATION) We know that when GDP, APE & ASF are unequal, than an interplay occurs (Macroeconomic coordination process) which bridges the gap between these variables. If there is a disparity between ADF & ASF, there will be an automatic reaction among money users & suppliers which restores the magnitude of these variables to equality generally known as funding adjustment. Similarly, if there is a difference in the values of GDP & APE, it will trigger the suppliers of goods & services to act together and bring the figure close to equality. This process is called output-price adjustment. The purchasers of the domestic output can be classified into three groups. Group 1 involves individuals having sufficient money...
6 Pages(1500 words)Assignment

Management Theory and Practice in the Early Childhood Education Industry

...Management Theory and Practice in the early childhood education industry This Report applies management theory into practice in the early childhood industry, especially in the context of women leaders. Management issues play a significant role in the academic sector, because early childhood professionals need higher levels of motivation in order to avoid burnout . As pointed out in a study by Osgood and Halsall (2007) where they carried out research to examine the position of women in leadership or management positions, a “glass ceiling” exists for women in the academic setting, which could significantly impair motivation. Since many of the individuals employed in the early education sector are women, addressing this issue is even more...
6 Pages(1500 words)Coursework

Macroeconomic Stabilization Theory and Policy

...Macroeconomic Stabilisation Theory and Policy Number and Number Number of Words: 2,006 Introduction Labour economics focus on studying how the employees and employers interact within a labour market such that employees are considered the supplier of labour services whereas the employers create the demand for labour services. Through salary and wages, employers hire the services of employees in order to generate income. Specifically the presence of high unemployment rate is considered a major problem in the local and international labour markets (Gupta, 2008, p. 62). Even though a country is active in terms of its economic activities, large number of working individuals who are out of employment becomes one of the major concerns...
8 Pages(2000 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Macroeconomic theory for FREE!

Contact Us