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The MIT Press Essential Knowledge
Macroeconomics
An accessible introduction to the basics of macroeconomics and how it affects the local and global economies.
Macroeconomics takes a broad perspective on the economy of a country or region; it studies economic changes in the aggregate, collecting data on production, unemployment, inflation, consumption, investment, trade, and other aspects of national and international economic life. Policymakers depend on macroeconomists' knowledge when making decisions about such issues as taxes and the public budget, monetary and exchange rate policies, and trade policies—all of which, in turn, affect decisions made by individuals and businesses. This volume in the MIT Press Essential Knowledge series offers an introduction to the basics of macroeconomics accessible to the noneconomist. Readers will gain the tools to interpret such economic events as the 2008 financial meltdown, the subsequent euro crisis, and the current protectionist dynamics seen in some developed countries.
The author, an academic economist and two-time Chilean Finance Minister, devotes a substantial part of his analysis to economic development, explaining why some countries achieve continuing economic growth while others become stagnant. He discusses the links between economic activity and employment; employment and unemployment rates; factors behind economic growth; money, inflation, and exchange rate systems; fiscal deficits; balance of payment crises; consumption and savings; investment decisions; fiscal policy; and the process of globalization and its macroeconomic implications.
Macroeconomics takes a broad perspective on the economy of a country or region; it studies economic changes in the aggregate, collecting data on production, unemployment, inflation, consumption, investment, trade, and other aspects of national and international economic life. Policymakers depend on macroeconomists' knowledge when making decisions about such issues as taxes and the public budget, monetary and exchange rate policies, and trade policies—all of which, in turn, affect decisions made by individuals and businesses. This volume in the MIT Press Essential Knowledge series offers an introduction to the basics of macroeconomics accessible to the noneconomist. Readers will gain the tools to interpret such economic events as the 2008 financial meltdown, the subsequent euro crisis, and the current protectionist dynamics seen in some developed countries.
The author, an academic economist and two-time Chilean Finance Minister, devotes a substantial part of his analysis to economic development, explaining why some countries achieve continuing economic growth while others become stagnant. He discusses the links between economic activity and employment; employment and unemployment rates; factors behind economic growth; money, inflation, and exchange rate systems; fiscal deficits; balance of payment crises; consumption and savings; investment decisions; fiscal policy; and the process of globalization and its macroeconomic implications.
Kindle Edition
First published January 1, 2011
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About the author
Felipe Larraín B.
13 books2 followersFelipe Larraín B. is Professor of Economics at Pontificia Universidad Católica de Chile (Facultad de Economía y Administración and the Latin American Center of Economics and Social Policies, CLAPES UC). He was Director of CLAPES UC and was Finance Minister of Chile from 2010 to 2014 and from 2018 to 2019. The coauthor (with Jeffrey D. Sachs) of Macroeconomics in the Global Economy and (with Beatriz Armendáriz) of The Economics of Contemporary Latin America (MIT Press), he has published thirteen books and more than 120 scholarly articles. He has been named Finance Minister of the Year for Latin America and the Americas several times.
Ratings & Reviews
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Displaying 1 - 16 of 16 reviews
September 12, 2023
An accessible if not super in-depth introduction to macroeconomics. I now know some of the terms and main actors and concepts, but I wished for more
In the end there are no winners in a trade war
The prose is easy and nuanced, while the concepts are quite esoteric at times. Besides building solid institutions and adhering to sound policies, involving investments in R&D, saving, liberalisation of markets and prudence there are no easy answers offered by the book. I found the human perspective missing, what a GDP contraction or currency devaluation means for average people in a country besides the statistics would have been good to enliven the arguments and importance of the subject.
Some observations from reading the book are below:
GDP counts the value of all final products (excluding half fabricates that are accumulated into final products).
Dollar adjusted for purchasing power parity to compare income and price differences between countries.
Roughly 52% of “happiness” in the world happiness index being explained by GDP per capita
Labor supply in the real world could decrease when wages increase due to people having more room for leisure
Labor lost in recession taking over 5 years before recovering to their pre-recession levels
Underemployment versus unemployment, and discouraged workers no longer seeking jobs, masking real trends in productivity
Importance of institutions, policies and technological development for per country growth rates
Prices are the rate at which money is exchanged for goods and services
Changes in the money supply (mostly printing money to cover deficits) over the needs of the economical activities leads to inflation
Monetary base being influenced by reserve requirements set by central banks
Currency pegs limit freedom of a country to set own policies, while a fixed exchange rate could face a balance of payments crisis if trust in the central bank starts to slide.
Contagion effects between emerging markets, including
Convergence as a basis of a currency union
Sustained fiscal deficits drive inflation, with higher central bank independence from politics being strongly correlated with lower inflation
People lending at the start of their life at the promise of their future permanent income, saving in middle life and de-saving again in the pension period, dependent on the development of the financial system.
Consumer expectations through this pattern influences economies of countries.
Saving in the world at roughly 24% of income, with the US standing at 17%
Spending on education is often classified as consumption, showing how bad we are at measuring human capital
High rates of GDP growth leads to higher investment quotes, making investment flows highly variable compared to consumption
Current account balance represent swing in indebtedness (current account deficits) and net savings (current account surplus) over the rest of the world.
US has a large trade deficit, while Spain gets an uplift of 3.5% of GDP from foreigners going on holiday there
Transient gains in exports (for instance related to oil prizes) should not become entrenched in consumption, given how sticky consumption is
Fiscal deficits are pro-cyclical and are hard to control in recessions
Indirect taxes often ending up being regressive as opposed to direct taxes on income
In the end there are no winners in a trade war
The prose is easy and nuanced, while the concepts are quite esoteric at times. Besides building solid institutions and adhering to sound policies, involving investments in R&D, saving, liberalisation of markets and prudence there are no easy answers offered by the book. I found the human perspective missing, what a GDP contraction or currency devaluation means for average people in a country besides the statistics would have been good to enliven the arguments and importance of the subject.
Some observations from reading the book are below:
GDP counts the value of all final products (excluding half fabricates that are accumulated into final products).
Dollar adjusted for purchasing power parity to compare income and price differences between countries.
Roughly 52% of “happiness” in the world happiness index being explained by GDP per capita
Labor supply in the real world could decrease when wages increase due to people having more room for leisure
Labor lost in recession taking over 5 years before recovering to their pre-recession levels
Underemployment versus unemployment, and discouraged workers no longer seeking jobs, masking real trends in productivity
Importance of institutions, policies and technological development for per country growth rates
Prices are the rate at which money is exchanged for goods and services
Changes in the money supply (mostly printing money to cover deficits) over the needs of the economical activities leads to inflation
Monetary base being influenced by reserve requirements set by central banks
Currency pegs limit freedom of a country to set own policies, while a fixed exchange rate could face a balance of payments crisis if trust in the central bank starts to slide.
Contagion effects between emerging markets, including
Convergence as a basis of a currency union
Sustained fiscal deficits drive inflation, with higher central bank independence from politics being strongly correlated with lower inflation
People lending at the start of their life at the promise of their future permanent income, saving in middle life and de-saving again in the pension period, dependent on the development of the financial system.
Consumer expectations through this pattern influences economies of countries.
Saving in the world at roughly 24% of income, with the US standing at 17%
Spending on education is often classified as consumption, showing how bad we are at measuring human capital
High rates of GDP growth leads to higher investment quotes, making investment flows highly variable compared to consumption
Current account balance represent swing in indebtedness (current account deficits) and net savings (current account surplus) over the rest of the world.
US has a large trade deficit, while Spain gets an uplift of 3.5% of GDP from foreigners going on holiday there
Transient gains in exports (for instance related to oil prizes) should not become entrenched in consumption, given how sticky consumption is
Fiscal deficits are pro-cyclical and are hard to control in recessions
Indirect taxes often ending up being regressive as opposed to direct taxes on income
May 9, 2025
In this current age, whit ever shifting market dinamics, I decided to go back to the basics and read a bit about the macroeconomics. Two-time Chilean Finance Minister, Felipe Larrain, delivers a solid introductory course in this field with start to the point explanations.
Although initially I thought Macroeconomics is another title in the series of “this could have been an article but a book sell better” I was happy to be proven wrong. I managed to get my head around topics like deficits and the impact of trading imbalances. How they eventually lead to currency depreciation and inflation. I particularly enjoy the last chapter of the book on globalisation and Branko Milanovici’s point with the elephant curve. The sort story is the 70s represented the turning point towards a global inequity which impacts all our day to day activities. A couple of worthy topics would be Purchasing power parity, and why it is better to use it rather the straight purchasing power in USD.
There were some points I could not get behind. Such as the argument that an strong economy requires strong institutions just for the author to back peddle and confirm that well China is a great counterexample. A similar argument was built around the topic of natural resources. The argument here being that a rich in resources country will look to sell those without building a more sophisticated revenue generating industry. Basically, the argument was that nobody why invents robots when they can sell oil to make money if you will. Yet the author back peddles immediately and give Norway as a great and sophisticated counterexample. This type of economic back and forth is the type of argument that pushes me away from a more in depth analysis of macroeconomics.
Although initially I thought Macroeconomics is another title in the series of “this could have been an article but a book sell better” I was happy to be proven wrong. I managed to get my head around topics like deficits and the impact of trading imbalances. How they eventually lead to currency depreciation and inflation. I particularly enjoy the last chapter of the book on globalisation and Branko Milanovici’s point with the elephant curve. The sort story is the 70s represented the turning point towards a global inequity which impacts all our day to day activities. A couple of worthy topics would be Purchasing power parity, and why it is better to use it rather the straight purchasing power in USD.
There were some points I could not get behind. Such as the argument that an strong economy requires strong institutions just for the author to back peddle and confirm that well China is a great counterexample. A similar argument was built around the topic of natural resources. The argument here being that a rich in resources country will look to sell those without building a more sophisticated revenue generating industry. Basically, the argument was that nobody why invents robots when they can sell oil to make money if you will. Yet the author back peddles immediately and give Norway as a great and sophisticated counterexample. This type of economic back and forth is the type of argument that pushes me away from a more in depth analysis of macroeconomics.
July 4, 2022
This was an excellent, current, readable introduction to macroeconomics, the area of my studies where I was always mediocre. It's also the only one I'm aware of that's cheap, available in audio, and modest in length. The author doesn't share my politics, being the finance minister of a centre-right party, and that made it even more valuable.
September 10, 2022
Excellent introduction to Macroeconomics. Understandable explanations of foundational principals and concepts that are reinforced with real world examples. Recommended for anyone interested in understanding the economics of countries and globalization. Not a technical book but it provides clear and concise definitions that will benefit students, professionals, and citizens.
November 3, 2024
An overview of Macroeconomics. This book would have benefitted from some formulas in places. It hints at the coming demise of the "Invisible Hand of the Market" notion. Early in the book is a chapter about labor which toes a libertarian line (unregulated is best), and shows how measuring a labor market can be difficult at best, and unmodelable at worst.
July 28, 2020
Nada del otro mundo, apenas una introducción muy sucinta.
November 27, 2020
As a person who has never taken a class on the subject, this was a great and concise introduction to it! I would highly recommend anyone to read it just to have a good idea of the topic.
December 25, 2021
I liked that the book gave examples of events that happened in different countries for each introduced concept.
June 30, 2022
Super quick overview of macroeconomics focusing on South American examples. Meh
March 8, 2023
A good introduction to the subject. Examples from various countries. An easy read. Not much technical.
July 28, 2023
Pretty good introduction, although could use some simpler terms since it's meant for beginners. My recommendation is to google everything you don't understand.
August 8, 2023
Neoliberal jibber-jabber
August 16, 2023
Macroeconomics made easy
A good refresher for anyone who studied economics in the distant past
Especially applicable to anyone who follows business news
Read
A good refresher for anyone who studied economics in the distant past
Especially applicable to anyone who follows business news
Read
January 19, 2025
cool book about Macroeconomics
April 7, 2020
Short but informative book on macroeconimics with real world examples. Good read.
June 29, 2025
A decent summary of macroeconomics. They do an ok job for explaining complex ideas to the layperson.
Displaying 1 - 16 of 16 reviews