Introduction to Dynamic Macroeconomic Theory: An Overlapping Generations Approach

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Harvard University Press, 1991 - Business & Economics - 372 pages
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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.

 

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Contents

Describing the Environment
5
Competitive Equilibrium
32
Introducing a Government
55
Bequests
90
LongTerm Government Bonds
119
Infinitely Lived Assets
144
Equilibrium Fluctuations
182
A Storage Technology
209
The Neoclassical Growth Model
225
PART
257
Multiple Currencies and Exchange Rates
292
Legal Restrictions and Monetary Policy
312
References
365
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About the author (1991)

George McCandless is an economist at the Central Bank of Argentina.

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