Macroeconomics, Global Edition eBook, 7th Edition

Olivier Blanchard

Macroeconomics, Global Edition eBook, 7th Edition

By Olivier Blanchard
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Olivier Blanchard
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For intermediate courses in Economics.


A Unified View of the Latest Macroeconomic Events

In Macroeconomics, Blanchard presents a unified, global view of macroeconomics, enabling students to see the connections between goods markets, financial markets, and labor markets worldwide. Organized into two parts, the text contains a core section that focuses on short-, medium-, and long-run markets and three major extensions that offer more in-depth coverage of the issues at hand. From the major economic crisis and monetary policy in the United States, to the problems of the Euro area and growth in China, the text helps students make sense not only of current macroeconomic events but also of events that may unfold in the future. Integrated, detailed boxes in the 7th Edition have been updated to convey the life of macroeconomics today; reinforce lessons from the models; and help students employ and develop their analytical and evaluative skills.


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  • Distinguished Authorship. Olivier Blanchard is one of Pearson’s most notable economics authors and brings his years of experience and research of macroeconomic issues, including time as the chief economist at the International Monetary Fund, to the text.
  • Comprehensive coverage of current events. Current macroeconomic events (such as Changes in the U.S. Natural Rate of Unemployment since 1990) are integrated into each chapter of the book within the text and detailed boxes. Each box shows students how they can use what they’ve learned to get an understanding of economics in the real world.
  • Implications of the Equilibrium Model. Blanchard offers a unique, underlying model that shows the implications of equilibrium in three sets of markets: the goods market, the financial market, and the labor market, helping students understand the impact of equilibrium.
  • UPDATED! Figures and tables have been updated using the latest data available.
  • Short, flexible chapters provide plenty of opportunity for alternative course organisation.
  • Margin notes create a dialogue with the reader, making the more difficult passages easier to comprehend, and giving a deeper understanding of the concepts and the results derived along the way.
  • Short appendixes to some chapters expand on points made within the chapter for students who want to further explore macroeconomics.
  • A Further Readings section, at the end of most chapters, indicates where to find more information. Each chapter ends with three ways of making sure that the material in the chapter has been digested:
    • A summary of the chapter’s main points.
    • A list of key terms.
    • A series of end-of-chapter exercises. “Quick Check” exercises are easy. “Dig Deeper” exercises are a bit harder, and “Explore Further” typically require either access to the Internet or the use of a spreadsheet program.
    • A list of symbols on the back endpapers makes it easy to recall the meaning of the symbols used in the text. 


Content Changes by Chapter

  • REVISED! Presentation of the IS-LM. The traditional treatment of monetary policy assumed that central banks chose the money supply and then let the interest rate adjust. Now however, central banks choose the interest rate and then let the money supply adjust. In terms of the IS-LM model used to describe the short run, the LM curve, instead of being upward sloping, should be treated as flat. This makes for a more realistic and a simpler model (Chapter 5).
  • NEW! Focus on the role of the financial system in the economy. The text extends the IS-LM model to allow for two interest rates—the interest rate set by monetary policy and the cost of borrowing for people or firms, with the state of the financial system determining the relation between the two (Chapter 6).
  • NEW! An IS-LM-PC (Phillips curve) model replaces the traditional aggregate supply and aggregate demand model, and gives a simpler and more accurate description of the role of monetary policy and of output and inflation dynamics (Chapter 9).
  • NEW! Coverage of the constraints on monetary policy, coming from the zero lower bound, and the constraints on fiscal policy, coming from the high levels of public debt, has been added.
  • NEW! and UPDATED! Focus boxes, include:
    • Unemployment and Happiness (Chapter 2)
    • The Liquidity Trap in Action (Chapter 4)
    • Bank Runs (Chapter 6)
    • Changes in the U.S. Natural Rate of Unemployment since 1990 (Chapter 8)
    • Okun’s Law, and Deflation in the Great Depression (Chapter 9)
    • The Construction of PPP Numbers (Chapter 10)
    • The Long View: Technology, Education, and Inequality (Chapter 13)
    • The Yield Curve, the Zero Lower Bound, and Lift-off (Chapter 14)
    • The Disappearance of Current Account Deficits in Euro Periphery Countries: Good News or Bad News? (Chapter 18)
    • Euro Area Fiscal Rules: A Short History (Chapter 21)
    • Money Financing and Hyperinflations, and Should You Worry about U.S. Public Debt (Chapter 22)


Material Is Organised Around Two Parts

1. The core (Chapters 3 through 13) include the following:

  • Chapters 3 through 6 focus on the short run:
    • They characterise equilibrium in the goods market and in the financial markets, and derive the basic model used to study short–run movements in output, the IS–LM model.
    • Chapter 6 is new, and extends the basic IS-LM model to take into account the role of the financial system, then uses it to describe what happens during the initial phase of the crisis.
  • Chapters 7 through 9 focus on the medium run:
    • Chapter 7 looks at equilibrium in the labor market and introduces the notion of the natural rate of unemployment.
    • Chapter 8 derives and discusses the relation between unemployment and inflation, known as the Phillips curve.
    • Chapter 9 develops the IS-LM-PC (PC for Phillips curve) model which takes into account equilibrium in the goods market, in the financial markets, and in the labor market. It shows how this model can be used to understand movements in activity and movements in inflation, both in the short and in the medium run.
  • Chapters 10 through 13 focus on the long run:
    • Chapter 10 describes the facts, showing the evolution of output across countries and over long periods of time.
    • Chapters 11 and 12 develop a model of growth and describe how capital accumulation and technological progress determine growth.
    • Chapter 13 focuses on the effects of technological progress on unemployment, and on inequality, not only in the long run, but also in the short and medium run.

2. A set of three major extensions (Chapters 14 through 24) include the following:

  • Chapters 14 through 20 cover the two major extensions:
    • Chapters 14 through 16 focus on the role of expectations in the short run and in the medium run. Expectations play a major role in most economic decisions and in the determination of output.
    • Chapters 17 through 20 focus on the implications of openness of modern economies. Chapter 20 focuses on the implications of different exchange rate regimes—from flexible exchange rates, to fixed exchange rates, currency boards, and dollarization.
  • Chapters 21 through 23 return to macroeconomic policy:
    • Chapter 21 looks at the role and the limits of macroeconomic policy in general.
    • Chapters 22 and 23 review fiscal and monetary policy. Some instructors may want to use parts of these chapters earlier. For example, it is easy to move forward the discussion of the government budget constraint in Chapter 22 or the discussion of inflation targeting in Chapter 23.
    • Chapter 24 serves as an epilogue; it puts macroeconomics in historical perspective by showing the evolution of macroeconomics in the last 70 years, discussing current directions of research, and the lessons of the crisis for macroeconomics.
Table of contents
  • Introduction
  • 1. A Tour of the World  
  • 2. A Tour of the Book
  • The Short Run  
  • 3. The Goods Market  
  • 4. Financial Markets I
  • 5. Goods and Financial Markets; The IS-LM Model
  • 6. Financial Markets II
  • The Medium Run
  • 7. The Labor Market
  • 8. The Phillips Curve, the Natural Rate of Unemployment, and Inflation
  • 9. Putting All Markets Together: From the Short to the Medium Run
  • The Long Run
  • 10. The Facts of Growth
  • 11. Saving, Capital Accumulation, and Output
  • 12. Technological Progress and Growth
  • 13. Technological Progress: The Short, the Medium, and the Long Runs
  • Expectations
  • 14. Financial Markets and Expectations
  • 15. Expectations, Consumption, and Investment
  • 16. Expectations, Output, and Policy
  • The Open Economy
  • 17. Openness in Goods and Financial Markets
  • 18. The Goods Market in an Open Economy
  • 19. Output, the Interest Rate, and the Exchange Rate
  • 20. Exchange Rate Regimes
  • Back to Policy
  • 21. Should Policy Makers Be Restrained?
  • 22. Fiscal Policy: A Summing Up
  • 23. Monetary Policy: A Summing Up
  • 24. Epilogue: The Story of Macroeconomics