The Data of Macroeconomics

Macroeconomics is primarily concerned with the behavior of just three variables -- national income, unemployment, and inflation. In this section, we review how these variables are measured, and how they have behaved in the United States over the last fifty years or so. Our aim in so doing is to highlight some features of the data that are of particular importance in the model building that we intend to carry out.
For each of these variables, we will address the following questions:
1.  What would we like these variables to measure?
2.  How, in fact, are they measured?
3.  How have they performed historically.
4.  Why do we care about these data?
Note: In addition, macroeconomics spends a considerable amount of time dealing with what might be called secondary variables: data that are frequently studied by macroeconomists but which, for various reasons, play something of a lesser or more specialized role. These include the stock market index, interest rates, exchange rates, the government deficit, the money supply, and the balance of trade. In order not to overload you with too many facts and too little context at this stage, we will study how these additional variables have performed at appropriate moments in the course.

Download the transparencies for this section here.
A guide to data sources can be found here.
Review questions can be found here.

Detailed Contents
1. Introductory comments
2. National Income
     Measuring GDP and GNP Statistical discrepancies in GDP
     Real versus nominal GDP
     What GDP does not measure Krugman on the standard of living
     Trends and cycles in GDP.
3. Inflation
     The behavior of inflation in the US
     Substitution bias & new goods The Boskin Commission Report 
  Mismeasurement of the CPI
     The costs of inflation The St. Louis Fed on shoe-leather costs
     Application: The Crime of 1873 Bimetalism, deflation and the cross of gold
4. Unemployment
    Measurement; behavior; Okun's law. How the government measures