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Description :
Summary
An advanced treatment of modern macroeconomics, presented through a sequence of dynamic equilibrium models, with discussion of the implications for monetary and fiscal policy.
This textbook offers an advanced treatment of modern macroeconomics, presented through a sequence of dynamic general equilibrium models based on intertemporal optimization on the part of economic agents. The book treats macroeconomics as applied and policy-oriented general equilibrium analysis, examining a number of models, each of which is suitable for investigating specific issues but may be unsuitable for others.
After presenting a brief survey of the evolution of macroeconomics and the key facts about long-run economic growth and aggregate fluctuations, the book introduces the main elements of the intertemporal approach through a series of two-period competitive general equilibrium models—the simplest possible intertemporal models. This sets the stage for the remainder of the book, which presents models of economic growth, aggregate fluctuations, and monetary and fiscal policy. The text focuses on a full analysis of a limited number of key intertemporal models, which are stripped down to essentials so that students can focus on the dynamic properties of the models. Exercises encourage students to try their hands at solving versions of the dynamic models that define modern macroeconomics. Appendixes review the main mathematical techniques needed to analyze optimizing dynamic macroeconomic models. The book is suitable for advanced undergraduate and graduate students who have some knowledge of economic theory and mathematics for economists
George Alogoskoufis is Professor of Economics at the Athens University of Economics and Business and a Research Associate of the Hellenic Observatory at the London School of Economics. From September 2016 till September 2019 he was the Constantine Karamanlis Professor at the Fletcher School at Tufts University. From March 2004 till January 2009 he served as Greece's Minister of Economy and Finance.
Content :
List of Figures and Table xxi
Preface xxvii
1. Introduction 1
2. The Intertemporal Approach 33
3. Savings, Investment, and Economic Growth 85
4. The Representative Household Model of Optimal Growth 119
5. Overlapping Generations Models of Growth 153
6. Fiscal Policy and Economic Growth 183
7. Money, Inflation, and Economic Growth 209
8. Externalities, Human Capital, and Technical Progress 231
9 Dynamic Stochastic Models under Rational Expectations 269
10. Consumption and Portfolio Choice under Uncertainty 297
11. Investment and the Cost of Capital 313
12. Money, Interest, and Prices 329
13. The Stochastic Growth Model of Aggregate Fluctuations 375
14. Perfectly Competitive Models with Flexible Prices 395
15. Keynesian Models and the Phillips Curve 413
16. A Model of Imperfect Competition and Staggered Pricing 449
17. A Model of Unemployment and Nominal Wage Contracts 475
18. Matching Frictions and Equilibrium Unemployment 509
19. The Macroeconomic Implications of Financial Frictions 539
20. The Role of Monetary Policy 551
21. Fiscal Policy and Government Debt 579
22. Bubbles, Multiple Equilibria, and Sunspots 601
23. The Interaction of Events and Ideas in Dynamic Macroeconomics 623
Appendixes 631
A. Variables, Functions, and Optimization 633
B. Linear Models and Linear Algebra 659
C. Ordinary Differential Equations 667
D. Difference Equations 683
E. Methods of Intertemporal Optimization 693
F. Random Variables and Stochastic Processes 703
References 723
Index 743
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AARON CHATTERJI
