Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole—for example, using interest rates, taxes, and government spending to regulate an economy's growth and stability. This includes regional, national, and global economies.
Macroeconomists study topics such as GDP (Gross Domestic Product), unemployment (including unemployment rates), national income, price indices, output, consumption, inflation, saving, investment, energy, international trade, and international finance.
Macroeconomics and microeconomics are the two most general fields in economics. The United Nations Sustainable Development Goal 17 has a target to enhance global macroeconomic stability through policy coordination and coherence as part of the 2030 Agenda.
According to a 2018 assessment by economists Emi Nakamura and Jón Steinsson, economic "evidence regarding the consequences of different macroeconomic policies is still highly imperfect and open to serious criticism."
History of macroeconomic thought
Macroeconomics descended from the once divided fields of business cycle theory and monetary theory. The quantity theory of money was particularly influential prior to World War II. It took many forms, including the version based on the work of Irving Fisher:
In the typical view of the quantity theory, money velocity (V) and the quantity of goods produced (Q) would be constant, so any increase in money supply (M) would lead to a direct increase in price level (P). The quantity theory of money was a central part of the classical theory of the economy that prevailed in the early twentieth century.
Ludwig von Mises's work Theory of Money and Credit, published in 1912, was one of the first books from the Austrian School to deal with macroeconomic topics.
Macroeconomics, at least in its modern form, began with the publication of General Theory of Employment, Interest and Money written by John Maynard Keynes.
