# Teaching Macroeconomics with Excel

### Screencasts

Each Excel workbook contains links to screencasts streamed from vimeo.com.

All screencasts are aggregated into a Macroeconomics with Excel channel (which is initially organized in the order listed below and is sortable and searchable), but it can be a chore to find a particular video. Thus, below is a complete listing of every screencast, organized by workbook, with a brief description. Click to view or select the link and copy to send it to someone.

Total Screencasts Listed Below: 85

Video quality is affected by connection, device, and player. Pause to buffer if choppy playback and toggle HD if the image is grainy. Some browsers have issues displaying HD so try a different browser if you have trouble.

Remember to pause or rewind as needed.

I recorded and uploaded these screencasts over a period of 12-18 months some time ago. Since then, I have updated and corrected the Excel files so the screencast may not exactly match the Excel file. I won't bother to redo the screencast unless it's so dated or different from the Excel file that it will confuse you. In other words, if you notice slight differences, just power through.

#### 1. Charting in Excel

HowtoChart.xls: a gentle introduction to graphing in Excel, includes simple and double Y charts using data from Central American countries. (6 screencasts)

RecessionChart.xls: uses the EconChart.xla add-in to enhance an oil price chart by adding shaded regions for recessions and applies shaded areas to a chart of USincome inequality. (5)

#### 2. Economic Growth Literacy

MaddisonData.xls:a macro-enhanced Excel workbook of Maddison’s World Economy data that enables easy comparison of countries over time. (9)

Numeracy -- mastering fundamental mathematical concepts about growth.

Economic Growth Literacy -- knowing what economists know about economic growth.

#### 3. The Solow Model

1. KAcc.xls: introduction to the Solow Model with focus on capital accumulation and the mechanics of the model. (2)

• vimeo.com/econexcel/kacc: introduces the Solow Model and shows how to use the EqPath sheet to run a simulation and find the steady-state solution.
• vimeo.com/econexcel/kacccs: copies the EqPath sheet and does comparative statics analysis via direct comparison of two economies.

2. GoldenRule.xls: explores transitional dynamics after changing the saving rate. (3)

3. Population.xls: empirical data followed by analysis of the effect of population growth on the Solow Model. (9)

Demography -- the statistical study of human populations, including areas such as fertility, death, and migration.

• vimeo.com/econexcel/popworld: world population growth since 1950 and log scale to show it has not grown at a constant rate.
• vimeo.com/econexcel/popvariouscountries: population growth in various countries with log scale to show differences in growth; effect of European conquest on indigenous peoples.
• vimeo.com/econexcel/popmalthus: data on England's population; direct editing of SERIES formula to modify a chart.
• vimeo.com/econexcel/poppyramid: creating a population pyramid chart by accessing US Census data directly from within Excel; animating chart; sex ratio at birth.
• vimeo.com/econexcel/popproject: forecasting via extrapolation; Pivot Table to do a cohort component projection (including how the population pyramid chart is made); conditional formatting; discussion of carrying capacity.

The Solow Model with Population Growth (n > 0)

4. TechProgress.xls: culmination of Solow Model series; incorporates technological progress; theory and data. (8)

#### 4. Data via the FRED add-in

1. GDP.xls: uses the FRED add-in to download and analyze basic aggregate data from national income accounts (3)

• vimeo.com/econexcel/gdpshares: download US GDP data and show that GDP = C + I + G + NX. It also computes shares of GDP for C, I, and G.
• vimeo.com/econexcel/gdpfluctuations: download Real and Potential GDP and the FRED add-in’s graphing tool plots the two series. Percentage change data are used to better illustrate fluctuations and the fact that I is volatile and primarily responsible for variability in GDP.
• vimeo.com/econexcel/gdpinvcomponents: download three components of investment: 1) tools, plant, and equipment, 2) housing, and 3) changes in business inventories in an attempt to find the source of volatility in investment. In addition to simply plotting the three over time, they are converted into standard units, which gives an intriguing view.

• vimeo.com/econexcel/unemintro: download data on the unemployment rate and plot it (with recession bars). Other variables are downloaded and basic definitions are illustrated with the data.
• vimeo.com/econexcel/unemgroups: download unemployment data on various sub-groups and illustrate that the impact of unemployment on particular categories of people is extremely variable.
• vimeo.com/econexcel/unemseasonaladj: Excel's Pivot Table tool is used to find the monthly average in seasonally adjusted and not seasonally adjusted unemployment rates to show the seasonal pattern in the data.
• vimeo.com/econexcel/unemlfpr: download data on the labor force participation rate and show the striking difference in men's and women's LFPR since WWII.
• vimeo.com/econexcel/unemsampling: explains the idea of sampling variability by sampling from a hypothetical population in Excel and using simulation to show the results from many samples.
• vimeo.com/econexcel/unemsearch: implements and solves a fixed sample search model with Monte Carlo simulation.

• vimeo.com/econexcel/inflationusahistory: examines the historical record of price variability since World War II, as measured by the CPI, in the United States. The last episode of severe inflation occurred in the 1970s. Since then, the US has enjoyed relative price stability.
• vimeo.com/econexcel/inflationcollegetuition:  downloads data from the BLS on the college tuition price index and compares it to the overall CPI. The results are dramatic—college tuition has risen twice as fast as overall prices. It also makes clear that data from other sources can be merged in a spreadsheet with FRED downloads. This is a simple, but powerful point.
• vimeo.com/econexcel/inflationrealvalues: shows how to deflate a nominal series of postage stamp prices with a price index to create a series of real postage stamp prices in 2012 dollars; task uses data for minimum wage; long CPI series back to 1790.
• vimeo.com/econexcel/inflationcomparing: downloads the CPI, GDP deflator, core inflation, and chained CPI. It compares them and explains why we have competing price indexes.

• vimeo.com/econexcel/moneyinflation: downloads various monetary aggregates (M1, M2, and MZM) and tries (and fails) to show how inflation depends on the money supply (including a 10-year moving average).
• vimeo.com/econexcel/moneymsi: covers the rather advanced topic of Divisia monetary services indexes (MSI); uses Zoomer tool from Econ Chart add-in.
• vimeo.com/econexcel/moneyseigniorage: downloads data on base money and nominal GDP to compute seigniorage rates; has data from IFS for a small subset of countries.
• vimeo.com/econexcel/moneyfftaylor: explains how the Taylor Rule versus the federal funds rate offers a window into how the Fed views the economy. It evaluates the tenures of Fed chairs since 1970.
• vimeo.com/econexcel/moneyfisher: downloads data on interest and inflation rates, showing that they move roughly together and then explains the relationship via the Fisher Effect.
• vimeo.com/econexcel/moneyxrates: downloads data on real effective exchange rates produced by the Fed and the OECD. It looks at the trade share weights for the United States and comments on the relationship between money supply and exchange rates.
• vimeo.com/econexcel/moneyhpfilter: shows how to use the HP array function in Excel to separate a variable into its trend and cyclical components using the Hodrick-Prescott algorithm.

#### 5. The Keynesian Model

1. KCross.xls: introduces the Keynesian Model via the familiar income-expenditure diagram and does comparative statics and multiplier analysis (3)

• vimeo.com/econexcel/introkcross: this introduction to the Keynesian Model stresses the concept of equilibrium and explains how equilibrium Y is determined. It shows how Solver can be used to find the equilibrium solution.
• vimeo.com/econexcel/compstaticskcross: shows how changes in exogenous variables affect equilibrium Y. The concept of elasticity is applied and Solver is used to find the change in G needed to move the economy to full-employment Y.
• vimeo.com/econexcel/multiplierkcross: explains the concept of a multiplier and how the G and T multipliers depend on the MPC.

2. MoneyMarket.xls: shows equilibrium in money market and derives money demand with a Baumol-Tobin Model (3)

• vimeo.com/econexcel/mmintro: introduces the money market and uses Excel's Solver to find the equilibrium interest rate.
• vimeo.com/econexcel/mmcs: does comparative statics in the money market by exploring the effect on the equilibrium interest rate when changing the money supply.
• vimeo.com/econexcel/mmmoneydemand: uses a Baumol-Tobin model to derive money demand from a comparative statics analysis (using Scenario Comp Statics).

3. ISLM.xls: implements the ISLM Model with screencasts organized in three groups (11)

Group 1: The first four screencasts are focused on the initial equilibrium and how it is obtained.

• vimeo.com/econexcel/islmintro: introduces the ISLM model with a no feedback version of the model where income does not affect money demand. When we make money demand a function of income, in the next screencast, the power and effectiveness of the IS and LM curves becomes immediately clear.
• vimeo.com/econexcel/islmequilibration: shows how the goods and money markets are interconnected and how the intersection of IS and LM reveal the general equilibrium solution.
• vimeo.com/econexcel/islmassetmarket: shows how an ISLM Model with asset market equilibration works by displaying an economy crawling along the LM curve to its equilibrium solution.
• vimeo.com/econexcel/islmstability: shows how the slopes of the IS and LM curves determine if the equilibrium solution is stable under a cobweb equilibration process.

Group 2: The next three screencasts are concerned with the mechanics of the model itself and how it functions.

• vimeo.com/econexcel/islmderive: derives the IS and LM curves as equilibrium solutions: for IS, Ye given r and for LM, re given Y.
• vimeo.com/econexcel/islmshifting: shows how to correctly shift curves depending on the placement of the exogenous variable. It emphasizes that for shocks that do not affect the slope, the IS curve shifts left and right, while the LM curve shifts up and down.
• vimeo.com/econexcel/islmcrowdingout: how multipliers are attenuated (lessened) when the model is extended because investment is crowded out as interest rates rise in response to attempts to stimulate the economy.

Group 3: The final four screencasts are devoted to the comparative statics properties of the model, including applications and analysis of fiscal and monetary policy.

• vimeo.com/econexcel/islmfluctuations: shows how the ISLM model can be used to explain economic fluctuations. In essence, booms and busts are driven by shocks that affect demand and drive equilibrium output and unemployment.
• vimeo.com/econexcel/islmpolicy: shows how fiscal policy (G and T) and monetary policy (Ms) can be used to move the economy to its full-employment, potental GDP position.
• vimeo.com/econexcel/islmfedpowerless: shows how the liquidity trap, zero bound, and inleastic investment demand can short-circuit the monetary transmission mechanism, leaving the Fed unable to use tranditional monetary policy to steer the economy.
• vimeo.com/econexcel/islmderivingad: derives aggregate demand (AD) from the ISLM graph and shows how AD shifts left/right as G, T, and Ms change.

4. ISLMADAS.xls: extends the ISLM Model by endogenizing the price level (6)

• vimeo.com/econexcel/islmadasintro: introduces the ISLMADAS Model and points out how it extends the ISLM Model by endogenizing the price level. This is similar to the way that ISLM extended the simple Keynesian Cross graph by connecting income to money demand.
• vimeo.com/econexcel/islmadasadjustment: shows how the ISLMADAS Model determines short and long run equilibrium positions for the economy.
• vimeo.com/econexcel/islmadasmultiplier: shows how the price feedback in the ISLMADAS model shrinks the G multiplier relative to the ISLM model where there is no price feedback.
• vimeo.com/econexcel/islmadasart: shows how to draw the ISLMADAS model "by hand" and explains how the IS and LM curves adjust to the ADAS graph.
• vimeo.com/econexcel/islmadasapplied: shows how to use the ISLMADAS model to interpret shocks and apply policies.
• vimeo.com/econexcel/islmadaslucas: explains how the Lucas critique applies to the ISLMADAS model. By shifting SRAS as policies are enacted to stimulate the economy, rational agents short-circuit the policy makers attempts to manipulate the economy. Policy is best understood as game theory not turning dials to control a machine.