Macrosystems

This book aims to provide students with the principles needed to analyze the interrelationship of the main macroeconomic variables - output, inflation, interest rates, unemployment, exchange rates and budget deficits. The author uses 10 increasingly complex models to analyze how these variables are affected by policy variables such as tax rates and exogenous variables like world trade and the price of oil. The methods and approach employed treat the economy as a complex dynamic system. This "systems" approach to the economy entails that all the main macroeconomic variables are simultaneously determined within a structure in which the role of policy and exogenous variables is explicit. The models themselves are analyzed using simple quantitative techniques and the simulation approach. Each model introduces a major component of the closed and open economy leading to the development of a complete macromodel. Using this, the reader will be able to analyze contemporary economic policy issues and the business environment in which investment decisions are made.