Modern Macroeconomics

by Chugh

ISBN: 9780262331647 | Copyright 2015

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The modern study and analysis of macroeconomics begins by considering how microeconomic units—consumers and firms—make decisions, and then investigates how these choices interact to yield economy-wide outcomes. This innovative textbook takes this “modern” approach, teaching macroeconomics through its microeconomic foundations. It does so by adopting the representative agent paradigm. By modeling the representative consumer and the representative firm, students will learn to describe macroeconomic outcomes and consider the effects of macroeconomic policies. Unique in its coverage of monopolistic competition, financial markets, and the interaction of fiscal and monetary policy, Modern Macroeconomics is suitable for use in intermediate undergraduate, advanced undergraduate, and graduate level courses.

The book first introduces the building blocks of macroeconomics, the heart of which is the representative consumer. It goes on to offer a brief history of macroeconomic thought, including supply-side economics, the Phillips curve, and the New Keynesian framework. It then covers two policy applications, monetary policy and the interaction of monetary and fiscal policy; optimal policy analysis for both the flexible price and the rigid price case; long-run steady states, treating the Solow growth framework and the neoclassical growth model; a search-and-matching framework for the analysis of unemployment; and the application of the tools of modern macroeconomics to “open economy,” or international macroeconomics. End-of-chapter problem sets enable students to apply the concepts they have learned. A separate Solutions Manual will be available for students to purchase. Teaching materials, including complete solutions and slides, will be available to qualified instructors.

Sanjay Chugh’s book is much more than a superb textbook for rigorous undergraduate teaching. By stripping down state-of-the-art models to their fundamental ingredients and intuitions, it provides an invaluable resource also for graduate students and researchers who want to refresh their knowledge of important models and results—or just learn what is really important about them.

Fabio Ghironi Paul F. Glaser Professor of Economics, University of Washington

An engaging and wide-ranging introduction to modern macroeconomics, highlighted by an accessible treatment of optimal monetary and fiscal policy.

Robert G. King Professor of Economics, Boston University
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Contents (pg. v)
Acknowledgments (pg. ix)
Introduction to Modern Macroeconomics (pg. xi)
1 - Microeconomics of Consumer Theory (pg. 1)
I - Consumer Analysis, Firm Analysis, Fiscal Policy, Introduction To Finance Theory (pg. 15)
2 - Static Consumption–Labor Framework (pg. 17)
3 - Dynamic Consumption–Savings Framework (pg. 39)
4 - Inflation and Interest Rates in the Consumption–Savings Framework (pg. 53)
5 - Dynamic Consumption–Labor Framework (pg. 77)
6 - Firms (pg. 83)
7 - Intertemporal Fiscal Policy (pg. 105)
8 - Infinite-Period Framework and Introduction to Asset Pricing (pg. 123)
9 - Shocks (pg. 143)
Interlude: General Equilibrium Macroeconomics (pg. 151)
II - A Brief (and Partial) History Of Macroeconomic Thought (pg. 155)
10 - History of Macroeconomics (pg. 157)
11 - Supply-Side Economics (pg. 173)
12 - The Phillips Curve (pg. 179)
13 - New Keynesian Economics (pg. 185)
14 - Real Business Cycle Theory (pg. 203)
III - Policy Analysis (pg. 215)
15 - Monetary Policy in the Intertemporal Framework (pg. 217)
16 - Monetary–Fiscal Interactions (pg. 241)
IV - Optimal Policy Analysis I: The Flexible-Price Case (pg. 263)
17 - Optimal Monetary Policy (pg. 265)
18 - Economic Efficiency (pg. 283)
19 - Optimal Fiscal Policy (pg. 293)
20 - Optimal Fiscal and Monetary Policy (pg. 309)
21 - Financial Accelerator and Role of Regulatory Policy (pg. 323)
V - Optimal Policy Analysis II: The Rigid Price Case (pg. 361)
22 - Monopolistic Competition: The Dixit–Stiglitz Framework (pg. 363)
23 - A New Keynesian View of Sticky Prices: The Rotemberg Framework (pg. 375)
24 - Optimal Monetary Policy with Sticky Prices (pg. 385)
VI - Long-Run Growth Analysis (pg. 403)
25 - Solow Growth Framework (pg. 405)
26 - Neoclassical Growth (pg. 425)
VII - Unemployment (pg. 431)
27 - Search, Unemployment, and Vacancies (pg. 433)
28 - Matching Equilibrium (pg. 451)
29 - Long-Lasting Jobs (pg. 461)
VIII - International Macroeconomics (pg. 475)
30 - Open-Economy Trade (pg. 477)
31 - Fiscal Theory of Exchange Rates (pg. 491)
Mathematical Appendix: Refreshers, Reviews, and Reminders (pg. 511)
Index (pg. 523)

Sanjay Chugh

Sanjay Chugh is Assistant Professor of Economics at Boston College.

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