Macroeconomic Growth & Equilibrium Models

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Abstractions about formal macroeconomic models of growth, output, and equilibrium, including growth models tracking capital and savings (Solow-Swan model, Harrod-Domar model, golden rule savings rate), equilibrium frameworks relating markets and aggregates (IS-LM model, AD-AS model, circular flow), and named relations or paradoxes linking policy to outcomes (Phillips curve, Laffer curve, paradox of thrift).

22 abstractions in this family — domain-specific abstractions that sit near one another in structural-signature space (k-means over structural-signature embeddings). Each is shown with its short description.

• AD–AS Model — The workhorse macroeconomic framework that plots the economy as the intersection of an aggregate-demand and an aggregate-supply schedule in price-level × output space, reading disturbances as curve shifts and diagnosing their source from a four-quadrant typology.
• Aggregate Demand — The total planned expenditure on final goods and services at a given price level, summed as C + I + G + (X − M) and matched against aggregate supply to set short-run output and the price level.
• Aggregate Supply — The total real output producers will supply at a given general price level — sloping up in the short run because wages are sticky, but vertical at potential output in the long run once the binding constraint migrates from nominal rigidity to capacity.
• Balassa-Samuelson Effect — The mechanism by which countries with fast-growing tradable-sector productivity end up with systematically higher price levels and appreciating real exchange rates — because tradable wage gains spill through mobile labor into non-tradable prices that cross-border arbitrage cannot compete away.
• Capital Accumulation — Track an economy's whole productive base as one state variable growing under the law of motion ΔK = I − δK, a self-feeding loop of output-saving-investment that diminishing returns brake into a steady state where thrift raises the level but not the long-run growth rate.
• Circular Flow — Represent the whole economy as two loops running opposite ways between households and firms, then track every off-loop flow as a leakage or an injection whose sums must balance when the loop closes in steady state.
• Dutch Disease — Trace how a boom in one tradable sector hollows out the others by running a foreign-exchange windfall through two channels — a spending effect that appreciates the real exchange rate and a resource-movement effect that bids up factor costs — so that headline GDP rises while non-booming tradables de-industrialize.
• Feldstein-Horioka Puzzle — The anomaly that national saving and investment rates are strongly correlated across countries when frictionless capital mobility predicts near-zero — turning the regression slope into a continuous gauge of de facto capital-market integration.
• Fiscal Multiplier — Compress a fiscal impulse's whole propagation cascade into one estimable ratio — the change in aggregate output over the change in government spending or taxation — driven by the marginal propensity to consume through induced rounds of income, less leakages and offset channels, and conditioned on regime.
• Golden Rule Savings Rate — Pin the savings rate that maximizes steady-state per-capita consumption at the capital stock where the marginal product of capital equals population growth plus depreciation (f'(k*) = n + δ) — turning savings-policy welfare into a single scalar sign test.
• Harrod-Domar Model — Estimate an economy's sustainable growth rate as its savings rate divided by its capital-output ratio (g = s/v), giving a two-lever policy arithmetic and exposing a knife-edge equilibrium with no mechanism to return the economy to its warranted path.
• IS–LM model — A two-curve diagram fixing short-run equilibrium in a closed economy: the downward IS curve where the goods market clears and the upward LM curve where the money market clears cross at one point (r, Y) that pins down the interest rate and output jointly.
• Laffer curve — Tax revenue is a non-monotone function of the rate — zero at 0% and zero at 100% — so a mechanical effect raising revenue and a behavioural base-erosion effect eroding it produce an interior revenue-maximising peak at rate 1/(1+e).
• Lucas Critique — Refuse to trust a macroeconometric model's historical coefficients for policy evaluation unless they are deep, regime-invariant parameters, because reduced-form relationships are themselves functions of the policy regime and shift the instant policy shifts.
• Natural Rate of Unemployment — The unemployment rate consistent with stable inflation in the long run — the frictional-plus-structural floor set by labour-market frictions and institutions, below which demand stimulus buys only accelerating inflation, never durable jobs.
• Paradox of Thrift — The macroeconomic result that a simultaneous, economy-wide rise in the desire to save lowers total saving in equilibrium, because the coordinated withdrawal of spending contracts demand and income until realized saving falls.
• Phillips Curve — The short-run inverse relation between unemployment and inflation — positioned by expected inflation, sloped by how anchored those expectations are, vertical at the natural rate in the long run, and displaced by supply shocks — whose exploitable trade-off dissolves once agents come to expect the inflation.
• Poverty Trap — A self-reinforcing development dynamic in which those below a critical resource threshold cannot accumulate enough to escape a low-level equilibrium — a bistable attractor where sub-threshold inputs are absorbed and reverted, while a large sustained push flips the basin and persists on its own.
• Ricardian Equivalence — Treat a debt-financed tax cut as a deferred tax of equal present value, so forward-looking households save the windfall to meet the future bill and the financing choice adds no stimulus.
• Say's Law (Supply Creates Its Own Demand) — The classical claim that aggregate production generates the income constituting aggregate demand, so a general glut cannot persist — a conditional resting on flexible market-clearing prices, no permanent hoarding, and a loanable-funds market that routes saving into investment.
• Secular Stagnation — A structural glut of saving over investment pushes the market-clearing interest rate below zero and beneath the lowest real rate a central bank can reach from its nominal floor, so rate cuts run out of room and the shortfall persists as deficient demand rather than the trend.
• Solow–Swan Model — The neoclassical growth model whose diminishing-returns structure drives each economy to a parameter-pinned steady state, yielding conditional convergence — economies sharing fundamentals close their gaps at a rate set by the capital share, while saving raises the level of income but not the long-run growth rate.