Recursive Macroeconomic Theory, fourth edition
1480 pp., 7 x 9 in,
- Published: September 11, 2018
The substantially revised fourth edition of a widely used text, offering both an introduction to recursive methods and advanced material, mixing tools and sample applications.
Recursive methods provide powerful ways to pose and solve problems in dynamic macroeconomics. Recursive Macroeconomic Theory offers both an introduction to recursive methods and more advanced material. Only practice in solving diverse problems fully conveys the advantages of the recursive approach, so the book provides many applications. This fourth edition features two new chapters and substantial revisions to other chapters that demonstrate the power of recursive methods.
One new chapter applies the recursive approach to Ramsey taxation and sharply characterizes the time inconsistency of optimal policies. These insights are used in other chapters to simplify recursive formulations of Ramsey plans and credible government policies. The second new chapter explores the mechanics of matching models and identifies a common channel through which productivity shocks are magnified across a variety of matching models. Other chapters have been extended and refined. For example, there is new material on heterogeneous beliefs in both complete and incomplete markets models; and there is a deeper account of forces that shape aggregate labor supply elasticities in lifecycle models.
The book is suitable for first- and second-year graduate courses in macroeconomics. Most chapters conclude with exercises; many exercises and examples use Matlab or Python computer programming languages.
Through a lucid exposition, a rigorous development of the tools, and a thorough analysis of each topic, this extraordinary textbook offers a state-of-the-art representation of the field. A must for every student with the ambition of becoming a scholar of macroeconomics, and for every teacher with the passion to guide students through this journey. This book makes you proud to be a macroeconomist.
Gianluca Violante, Professor of Economics, Princeton University
This classic textbook has taught generations of students the tools of dynamic economics. At the same time, it has been continually updated to serve as a key reference manual for researchers. Once you have been 'Bellmanized' by this book, your life as an economist will never be the same.
Monika Piazzesi, Joan Kenney Professor of Economics, Stanford University
Recursive Macroeconomic Theory thoroughly works through a wide variety of applications of recursive methods to the analysis of central themes in macroeconomics. As Alexander the Great is said to have always kept a copy of the Iliad under his pillow, I think the modern macroeconomist would do well to keep a copy of this excellent work close at hand.
Fernando Alvarez, William C. Norby Professor of Economics, University of Chicago