Synopses & Reviews
Synopsis
Economies are constantly in flux, and economists have long sought reliable means of analyzing their dynamic properties. This book provides a succinct and accessible exposition of modern dynamic (or intertemporal) macroeconomics. The authors use a microeconomics-based general equilibrium framework, specifically the overlapping generations model, which assumes that in every period there are two generations which overlap. This model allows the authors to fully describe economies over time and to employ traditional welfare analysis to judge the effects of various policies. By choosing to keep the mathematical level simple and to use the same modeling framework throughout, the authors are able to address many subtle economic issues. They analyze savings, social security systems, the determination of interest rates and asset prices for different types of assets, Ricardian equivalence, business cycles, chaos theory, investment, growth, and a variety of monetary phenomena.
Introduction to Dynamic Macroeconomic Theory will become a classic of economic exposition and a standard teaching and reference tool for intertemporal macroeconomics and the overlapping generations model. The writing is exceptionally clear. Each result is illustrated with analytical derivations, graphically, and by worked out examples. Exercises, which are strategically placed, are an integral part of the book.
Description
Includes bibliographical references (p. 365-367) and index.
About the Author
George McCandless is an economist at the Central Bank of Argentina.
Central Bank of Argentina
Table of Contents
Preface
PART ONE: REAL ECONOMIES
1. Describing the Enviroment Time
The Population
Total Resources
Feasible Consumption Allocations
Efficient Consumption Allocations
Preferences
Pareto Optimality
Reprise
2. Competitive Equilibrium
Private Ownership
Competitive Intragenerational Trade
Consumption Decisions
An Example
Savings Function
Competitive Equilibrium
An Example of a Competitive Equilibrium
Reprise
3. Introducing a Government
Taxes
Government Borrowing
Ricardian Equivalence
Rolling Over Government Debt
Equivalence between Equilibria with Bonds and Tax-Transfer Schemes
Reprise
Appendix: Proof of Ricardian Equivalence
4. Bequests
Generation 0 Cares about Generation 1
Diversity within Generations
All Generation Care about Their Children
Reprise
5. Long-Term Government Bonds
k-Period Bonds
Temporary Equilibrium
Perfect Foresight
Term Structure of Interest Rates
Reprise
6. Infinitely Lived Assets
Temporary Equilibrium with Land
An Example
A Price Function
Perfect Foresight Competitive Equilibria
Three Example Economies
The Price of Land and the Crop
International Capital Movements
Reprise
7. Equilibrium Fluctuations
Real Cycles
Multiple Nonstationary Equilibria
Equilibria with the Crop
Reprise
8. A Storage Technology
Feasible Allocations
Competitive Equilibrium
Finding a Competitive Equilibrium
Reprise
9. The Neoclassical Growth Model
The Physical Environment and the Feasible Allocations
Equilibrium Outputs, Inputs, and Factor Rentals at Each Date
The Individual Choice Decision under Perfect Foresight
A Definition of Equilibrium
Equilibrium Paths when n=1 and g=0
Equilibrium Paths when n>1 and g=0
Equilibrium Paths when n=1 and g>
Differential Savings Rates
Reprise
PART TWO: MONETARY ECONOMIES
10. Money and Inflation
Equilibria with fixed Money Supply
Fiat Money and Other Assets
Inflation
Money Creation and Inflation
Seignorage
Nonoptimality of Seignorage
Reprise
11. Multiple Currencies and Exchange Rates
Independence with Laissez-Faire Floating Rates
Seignorage in a Multiple Money World
Portfolio Autarky Regimes
Reprise
12. Legal Restrictions and Monetary Policy
Comsumption Choice under Credit Controls
Equilibrium Conditions under Credit Controls
Monetary Policy
The Government
Individual Choice with Requirements and No Government Bonds
Equilibrium with Reserve Requirements and No Government Bonds
A Two-Group Example of a Binding Equilibrium
Large Denomination Bonds
Stationary Equilibrium with Large Denomination Bonds
Reprise
References
Index