[...]... of optimal fiscal policies now and for the future, including various aspects of tax reform Chapter 19 discusses the optimal rules for monetary policy The book concludes with a brief survey of forecasting methods in chapter 20 THE IMPORTANCE OF MACROECONOMICS 19 KEY TERMS AND CONCEPTS Ceteris Paribus Empirical Discipline Ergo Fallacy of Composition Fiscal Policy Macroeconomics Microeconomics Monetary... texts for the academic market, none of them – including my own previous text – adequately addressed the issue of how business managers and executives can use macroeconomic data and information to improve the performance of their businesses This book is the outcome of those efforts For those who prefer the more traditional treatment of certain key economic topics, such as consumption, investment, and inflation,... Michael Locke and Michael Sununu for many helpful comments Nicholas Stadtmiller also read an early draft and offered a number of useful comments Finally, as always, I would like to thank Susan Carroll for standing by me in good times and bad and serving as a constant source of inspiration and encouragement Michael K Evans Boca Raton, Florida November, 2002 Macroeconomics for Managers Michael K Evans Copyright... preliminary data are sometimes misleading Managers should be aware when current economic results are likely to contain errors that could affect their business in the future Some of the more likely sources of these errors are also discussed in chapters 2 and 3 Macroeconomics for Managers Michael K Evans Copyright © 2004 by Michael K Evans chapter one The importance of macroeconomics Introduction Macroeconomic... measures are implemented to improve economic performance, companies around the globe must alter their own business strategies Trying to forecast the future is a hazardous occupation After having tried to predict the economy and monitoring other forecasters for four decades, it has become obvious that no one ever gets it right all the time Failure to forecast creates a planning void that leads to suboptimal... be used to form the core of macroeconomic theory Many of the empirical relationships among macroeconomic variables, while far from ‘‘perfect’’ and subject to change, provide links strong enough to improve our understanding of how the economy works They can be used for accurate forecasts, and can serve as the basis for intelligent policy decisions While expectations do change, they are not formed in... the underlying relationships that form the foundation of modern macroeconomics, these theories should be empirically verified Thus as each topic is introduced, the relevant facts and figures are presented, and key economic relationships are shown empirically as well as theoretically Even for those who do not choose to use formal models, empirical implementation reinforces the viewpoint, found throughout... Unknown Lag Structures and the Conservatism Principle 20.6 Summary of Noneconometric Forecasting Methods 20.7 Naive Models and Consensus Surveys of Macro Forecasts 20.8 Using the Index of Leading Economic Indicators to Predict the Economy 20.9 Survey Methods for Individual Sectors 20.10 Recap: How Managers Should Use Forecasting Tools Key Terms and Concepts Summary Questions and Problems Notes Bibliography... structure is vital for every corporation Managers must understand how much to borrow, when to borrow, and the appropriate debt/equity mix A clear understanding of the macroeconomic factors that determine financial market prices is also essential for successful business management While all branches of economics are evolving disciplines, that is particularly true for macroeconomics To a certain extent, all... text with a more empirical flavor and offer a valuable guide for business managers Most of this material was developed when I was teaching macroeconomics at the Kellogg Graduate School of Management at Northwestern University In developing the course material, my perception indicated that while there were several useful macroeconomic texts for the academic market, none of them – including my own previous . w1 h0" alt="" Macroeconomics for managers Macroeconomics for managers Michael K. Evans © 2004 by Michael K. Evans 350 Main Street, Malden, MA 02148-5020, USA 108 Cowley Road, Oxford OX4 1JF,. Importance of Macroeconomics 3 Introduction 3 1.1 What is Macroeconomics? 5 1.2 Links Between Macroeconomics and Microeconomics 8 1.3 Current Core of Macroeconomic Theory 10 1.4 Macroeconomics. are also discussed in chapters 2 and 3. Macroeconomics for Managers Michael K. Evans Copyright © 2004 by Michael K. Evans chapter one The importance of macroeconomics Introduction Macroeconomic