Trying to summarize the essentials of macroeconomic theory in the wake of the financial crisis that has shaken not only Western economies but also the macroeconomic profession is no easy task. In particular, the notion that markets are self-correcting and always in equilibrium appears to have taken a heavy blow. However, the jury is still out on which areas should be considered as failures and what which constitute the future of research.
The overall aim of this text is to provide a compact overview of the contributions that are currently regarded as the most important for macroeconomic analysis and to equip the reader with the essential theoretical knowledge that all advanced students in macroeconomics should be acquainted with.
The result is a compact text that should act as the perfect complement to further study of macroeconomics: an introduction to the key concepts discussed in the journal literature and suitable for students from upper undergraduate level through to PhD courses.
Author(s): Ola Olsson
Publisher: Routledge
Year: 2012
Language: English
Pages: 180
Front Cover
Essentials of Advanced
Macroeconomic Theory
Copyright Page
Contents
List of figures
Preface
1. Introduction
1.1 The issues
1.2 The national accounts identity
1.3 Outline
Part I: The Long Run
2. The Malthusian World
2.1 Introduction
2.2 The law of diminishing returns
2.3 The Malthusian trap
2.4 Endogenous fertility
2.5 The collapse of the Malthusian link
3.
The Solow Growth Model
3.1 Introduction
3.2 Basic assumptions
3.3 Dynamics
3.4 Equilibrium
3.5 Implications
3.6 Extensions
4.
Endogenous Growth Theory
4.1 Introduction
4.2 AK model 29
4.3 Endogenous technological change
4.4 Romer’s product variety model
4.5 Schumpeterian growth models
4.6 Innovation versus imitation
5.
The Overlapping Generations Model
5.1 Household optimization
5.2 Endogenous saving
5.3 Endogenous growth
Part II: The Short and Medium Run
6.
Equilibrium Business Cycles
6.1 Technology shocks to production
6.2 Labor demand
6.3 Households
7.
Financial Crises
7.1 Basic assumptions
7.2 Banks
7.3 A bank run equilibrium
7.4 Foreign credit
7.5 Short-term debt
7.6 Liberalizing international credit markets
8.
Consumption and Saving
8.1 The Keynesian consumption function
8.2 Friedman’s critique
8.3 The permanent income hypothesis
8.4 An example
8.5 The random-walk model
8.6 Precautionary saving
8.7 Interest rates and time discount rates
8.8 Relative consumption
8.9 Time inconsistency
9.
Investment and Asset Markets
9.1 The Keynesian investment function
9.2 The firm’s investment decision
9.3 Adjustment costs
9.4 The housing market
10.
Unemployment and the Labor Market
10.1 Labor market disequilibrium
10.2 Efficiency wages
10.3 The Shapiro–Stiglitz model
10.4 Insider–outsider models
10.5 Search and matching models
Part III: Macroeconomic Policy
11.
IS–MP, Aggregate Demand, and Aggregate Supply
11.1 Aggregate expenditure and the multiplier
11.2 The IS–MP model
11.3 Aggregate demand
11.4 Aggregate supply
11.5 Financial intermediation
11.6 New Keynesian models
12.
Public Finance and Fiscal Policy
12.1 The government budget identity
12.2 Ricardian equivalence
12.3 Tax smoothing
12.4 Political economy of government debt
12.5 Debt financing versus debt forgiveness
13.
Inflation and Monetary Policy
13.1 The quantity theory of money
13.2 Inflation and the money market
13.3 Time inconsistency in monetary policy
13.4 Political business cycles
13.5 The Taylor rule
13.6 Seigniorage
14.
The Open Economy
14.1 Open economy accounting
14.2 A representative agent framework
14.3 The Mundell–Fleming model
14.4 Exchange rate overshooting
14.5 Currency unions
15.
Mathematical Appendix
15.1 Introduction
15.2 Derivatives of some basic functions
15.3 Differentiation rules
15.4 Chain differentiation
15.5 Implicit function differentiation
15.6 Applications to macroeconomics
15.7 Basic properties of exponents and logarithms
Notes
Bibliography
Index
