BOSTON— Rates headed down? Inflation heating up? What's the Fed thinking? For thoughtful professionals in business, government, and the non-profit sector, such questions are anything but academic.
Harvard Business School Professor David A. Moss has written a primer on macroeconomic theory and practice, A Concise Guide to Macroeconomics: What Managers, Executives, and Students Need to Know (Harvard Business School Press). Fiscal and monetary policy help set the ground rules for the global economy, and A Concise Guide to Macroeconomics (Harvard Business School Press) illuminates, through current and historical examples, how and why the rules keep changing.
Moss explains the basic relationships between various macroeconomic phenomena and how they help shape the global economy. The heart of the book is a logical presentation of macroeconomic building blocks:
- Output - How the value of goods and services that a nation produces (GDP) is measured, and why this output ultimately determines its standard of living.
- Money - How the money supply and the various "prices" of money - the interest rate, the exchange rate, and the price level (and thus inflation) - affect the overall economic environment.
- Expectations - How expectations of key macroeconomic factors (such as inflation and interest rate changes) and of the underlying strength of the economy can shape the decisions of economic actors, from consumers to businesses to government.
"Any critical observer of current debates about the state of the macro economy needs a clear understanding of a half-dozen basic concepts, how they are measured, and how they are connected," said Robert Slow, Institute Professor Emeritus at the Massachusetts Institute of Technology and Nobel Prize Laureate in Economics. "David Moss's short, jargon-free book provides just that. It does not tell you what should be done, but how to begin thinking about what should be done."
Avoiding simplistic solutions, A Concise Guide to Macroeconomics presents the basic principles and relationships at the core some of the controversial questions that animate current economic policy debate, including:
- Is the American current-account deficit a threat to the economy?
- Is deficit spending by government an effective economic stimulus?
- Can investment in stocks and bond "save" Social Security?
David A. Moss is the John G. McLean Professor of Business Administration at Harvard Business School, where he teaches in the required first-year MBA course Business, Government, and the International Economy. He graduated from Cornell University (B.A., 1986) and went on to earn an M.A. in economics (1988) and a Ph.D. in history (1992) from Yale University. In 1992 and 1993, he served as a senior economist at Abt Associates, a public policy consulting firm based in Cambridge, Mass. He joined the Business School faculty in 1993.