Prototype for a National Macroeconomic Model in Action

The keys to this fundamentally microeconomic approach to the study of a national economy are accuracy in prices and precision in measurement of price levels and money and near-money gauges. A closely interwoven aspect of these calculations is they force integration of financial and non-financial sectors of the economy. In the process, the third prevailing force in the operation of national markets-interest rates-is embodied. Together, price levels, money measurements, and interest rates, combined in the market equations, lead to an end result, originally described by the author in From Demand to Supply and Back Again, that is a quantitive expression of the actual circumstance of the economy. It is not an optimum because it is founded on actual conditions, which include market imperfections. What it is, and what it does enable, is access to the pathways or mechanism by which the outcome has been achieved.