Chapter 16 Output and the Exchange Rate in the Short Run
Chapter 16 ▪ Output and the Exchange Rate in the Short Run
Chapter organization Determinants of Aggregate Demand in an Open Economy The Equation of Aggregate Demand a How Output Is determined in the Short run a Output Market Equilibrium in the Sort Run: The DD Schedule Asset Market Equilibrium in the Short Run: The AA Schedule Short-Run Equilibrium for an Open economy Putting the dd and AA Schedules Together Copyright C 2003 Pearson Education, Inc Slide 16-2
Copyright © 2003 Pearson Education, Inc. Slide 16-2 Chapter Organization ▪ Determinants of Aggregate Demand in an Open Economy ▪ The Equation of Aggregate Demand ▪ How Output Is Determined in the Short Run ▪ Output Market Equilibrium in the Sort Run: The DD Schedule ▪ Asset Market Equilibrium in the Short Run: The AA Schedule ▪ Short-Run Equilibrium for an Open Economy: Putting the DD and AA Schedules Together
Chapter organization Temporary Changes in Monetary and Fiscal Policy a Inflation Bias and Other Problems of policy Formulation a Permanent Shifts in Monetary and Fiscal Policy Macroeconomic Policies and the current account Gradual Trade Flow Adjustment and Current Account Dynamics Summary Copyright C 2003 Pearson Education, Inc Slide 16-3
Copyright © 2003 Pearson Education, Inc. Slide 16-3 ▪ Temporary Changes in Monetary and Fiscal Policy ▪ Inflation Bias and Other Problems of Policy Formulation ▪ Permanent Shifts in Monetary and Fiscal Policy ▪ Macroeconomic Policies and the Current Account ▪ Gradual Trade Flow Adjustment and Current Account Dynamics ▪ Summary Chapter Organization
Chapter organization ppendix I: The /S-LM Model and the dD-AA Model Appendix ll: Intertemporal Trade and Consumption Demand Appendix Ill: The Marshall-Lerner Condition and Empirical Estimates of Trade Elasticities Copyright C 2003 Pearson Education, Inc Slide 16-4
Copyright © 2003 Pearson Education, Inc. Slide 16-4 ▪ Appendix I: The IS-LM Model and the DD-AA Model ▪ Appendix II: Intertemporal Trade and Consumption Demand ▪ Appendix III: The Marshall-Lerner Condition and Empirical Estimates of Trade Elasticities Chapter Organization
Introduction Macroeconomic changes that affect exchange rates interest rates, and price levels may also affect output This chapter introduces a new theory of how the output market adjusts to demand changes when product prices are themselves slow to adjust A short-run model of the output market in an open economy will be utilized to analyze The effects of macroeconomic policy tools on output and the current account The use of macroeconomic policy tools to maintain full employment Copyright C 2003 Pearson Education, Inc Slide 16-5
Copyright © 2003 Pearson Education, Inc. Slide 16-5 Introduction ▪ Macroeconomic changes that affect exchange rates, interest rates, and price levels may also affect output. • This chapter introduces a new theory of how the output market adjusts to demand changes when product prices are themselves slow to adjust. ▪ A short-run model of the output market in an open economy will be utilized to analyze: • The effects of macroeconomic policy tools on output and the current account • The use of macroeconomic policy tools to maintain full employment