This book provides a concise yet rigorous discussion of the main issues in modern macroeconomics. In particular, it examines the controversy over the role and conduct of macroeconomic stabilization policy.

Part 1 Mainstream macro-models and schools of thought: mainstream macro-modesl; mainstream schools of thought. Part 2 The balance of payments and exchange rates: the Mundell-Fleming - Keynesian model under fixed exchange rates; the monetary approach to the balance of payments under fixed exchange rates; the Mundell-Fleming - Keynesian model under flexible exchange rates; the monetary approach under flexible exchange rates; exchange rate models and overshooting. Part 3 Inflation and unemployment: the Phillips curve; the expectations-augmented Phillips curve; policy implications. Part 4 Money and economic activity: monetary policy in the IS-LM model; the determination of the money supply; the demand for money; the transmission mechanism; empirical evidence on the demand for money. Part 5 Fiscal policy and aggregate demand: Keynesian view; monetarist view; the government budget constraint and the controversy over the power of fiscal policy; crowding-out in the AD-AS model. Part 6 Business cycles: the nature of the business cycle; early theories of the business cycle; the equilibrium business cycle; the political business cycle.