Many undergraduate texts treat macroeconomics as a set of distinct topics rather than as a unified body of theory and empirical findings. In contrast, this text by Alan Auerbach and Laurence Kotlikoff uses a single analytic frameworkandmdash;the two-period life-cycle modelandmdash;to explore and connect each of the major issues in contemporary macroeconomics. The model describes the evolution of the economy over time in terms of the behavior of overlapping generations of individuals, each of whom lives for two periods: youth and old age. This versatile framework can encompass most macroeconomic schools of thought through the alteration of key assumptions. The use of one basic model also allows the authors to explore important topics not always addressed adequately in other texts; these include credit constraints, real business cycles, generational accounting, and international capital flows markets.

Written in a clear, accessible style, this shortened and simplified second edition provides a systematic way to interpret macroeconomic outcomes, to understand various policy proposals, and to appreciate how individuals and firms fit into the big picture.

Written in a clear, accessible style, this shortened and simplified second edition provides a systematic way to interpret macroeconomic outcomes, to understand various policy proposals, and to appreciate how individuals and firms fit into the big picture.

This text by Alan Auerbach and Laurence Kotlikoff uses a single analytic frameworkandmdash;the two-period life-cycle modelandmdash;to explore and connect each of the major issues in contemporary macroeconomics.

Laurence J. Kotlikoff is Professor of Economics at Boston University. One of the nation's leading experts on fiscal policy, national saving, and personal finance, Kotlikoff is the author of Essays on Savings, Bequests, Altruism, and Life-Cycle Planning (2001), Generational Policy (2003), The Coming Generational Storm (2004), all published by The MIT Press, and other books.