Advanced Macroeconomics

by ROMER

• ISBN13: 9780072877304
• ISBN10: 0072877308
• Edition: 3rd
• Format: Hardcover
• Copyright: 2005-08-17
• Publisher: McGraw-Hill/Irwin

Summary

David Romer's Advanced Macroeconomics, 3e is the standard text and the starting point for graduate macro courses and helps lay the groundwork for students to begin doing research in macroeconomics and monetary economics. A series of formal models are used to present and analyze important macroeconomic theories. The theories are supplemented by examples of relevant empirical work, which illustrate the ways that theories can be applied and tested. This well-respected and well-known text is unique in the marketplace.

Table of Contents

Preface to the Third Edition	xvii
Introduction	1	(4)
Chapter 1 THE SOLOW GROWTH MODEL	5	(43)
1.1 Some Basic Facts about Economic Growth	5	(4)
1.2 Assumptions	9	(5)
1.3 The Dynamics of the Model	14	(3)
1.4 The Impact of a Change in the Saving Rate	17	(5)
1.5 Quantitative Implications	22	(4)
1.6 The Solow Model and the Central Questions of Growth Theory	26	(3)
1.7 Empirical Applications	29	(8)
1.8 The Environment and Economic Growth	37	(7)
Problems	44	(4)
Chapter 2 INFINITE-HORIZON AND OVERLAPPING-GENERATIONS MODELS	48	(52)
Part A THE RAMSEY-CASS-KOOPMANS MODEL	48	(28)
2.1 Assumptions	48	(2)
2.2 The Behavior of Households and Firms	50	(6)
2.3 The Dynamics of the Economy	56	(6)
2.4 Welfare	62	(1)
2.5 The Balanced Growth Path	63	(2)
2.6 The Effects of a Fall in the Discount Rate	65	(5)
2.7 The Effects of Government Purchases	70	(6)
Part B THE DIAMOND MODEL	76	(16)
2.8 Assumptions	76	(1)
2.9 Household Behavior	77	(3)
2.10 The Dynamics of the Economy	80	(7)
2.11 The Possibility of Dynamic Inefficiency	87	(4)
2.12 Government in the Diamond Model	91	(1)
Problems	92	(8)
Chapter 3 NEW GROWTH THEORY	100	(74)
Part A RESEARCH AND DEVELOPMENT MODELS	101	(31)
3.1 Framework and Assumptions	101	(2)
3.2 The Model without Capital	103	(5)
3.3 The General Case	108	(7)
3.4 The Nature of Knowledge and the Determinants of the Allocation of Resources to R&D	115	(7)
3.5 Endogenous Saving in Models of Knowledge Accumulation: An Example	122	(3)
3.6 Models of Knowledge Accumulation and the Central Questions of Growth Theory	125	(2)
3.7 Empirical Application: Population Growth and Technological Change since 1 Million B.C.	127	(5)
Part B CROSS-COUNTRY INCOME DIFFERENCES	132	(34)
3.8 Extending the Solow Model to Include Human Capital	133	(5)
3.9 Empirical Application: Accounting for Cross-Country Income Differences	138	(6)
3.10 Social Infrastructure	144	(10)
3.11 A Model of Production, Protection, and Predation	154	(7)
3.12 Differences in Growth Rates	161	(5)
Problems	166	(8)
Chapter 4 REAL-BUSINESS-CYCLE THEORY	174	(48)
4.1 Introduction: Some Facts about Economic Fluctuations	174	(4)
4.2 Theories of Fluctuations	178	(2)
4.3 A Baseline Real-Business-Cycle Model	180	(3)
4.4 Household Behavior	183	(4)
4.5 A Special Case of the Model	187	(5)
4.6 Solving the Model in the General Case	192	(5)
4.7 Implications	197	(6)
4.8 Empirical Application: The Persistence of Output Fluctuations	203	(5)
4.9 Empirical Application: Calibrating a Real-Business-Cycle Model	208	(2)
4.10 Extensions and Limitations	210	(6)
Problems	216	(6)
Chapter 5 TRADITIONAL KEYNESIAN THEORIES OF FLUCTUATIONS	222	(49)
5.1 Aggregate Demand	223	(8)
5.2 The Open Economy	231	(11)
5.3 Alternative Assumptions about Wage and Price Rigidity	242	(9)
5.4 Output-Inflation Tradeoffs	251	(7)
5.5 Empirical Application: Money and Output	258	(6)
5.6 Empirical Application: The Cyclical Behavior of the Real Wage	264	(2)
Problems	266	(5)
Chapter 6 MICROECONOMIC FOUNDATIONS OF INCOMPLETE NOMINAL ADJUSTMENT	271	(75)
Part A THE LUCAS IMPERFECT-INFORMATION MODEL	272	(13)
6.1 The Case of Perfect Information	273	(3)
6.2 The Case of Imperfect Information	276	(4)
6.3 Implications and Limitations	280	(5)
Part B NEW KEYNESIAN ECONOMICS	285	(24)
6.4 A Model of Imperfect Competition and Price-Setting	286	(4)
6.5 Are Small Frictions Enough?	290	(4)
6.6 Real Rigidity	294	(9)
6.7 Coordination-Failure Models and Real Non-Walrasian Theories	303	(6)
Part C DYNAMIC NEW KEYNESIAN MODELS AND STAGGERED PRICE ADJUSTMENT	309	(30)
6.8 Building Blocks of Dynamic New Keynesian Models	310	(6)
6.9 Predetermined Prices	316	(3)
6.10 Fixed Prices	319	(7)
6.11 The Caplin-Spulber Model	326	(2)
6.12 Empirical Applications	328	(5)
6.13 The Mankiw-Reis Model	333	(6)
Problems	339	(7)
Chapter 7 CONSUMPTION	346	(40)
7.1 Consumption under Certainty: The Permanent-Income Hypothesis	347	(6)
7.2 Consumption under Uncertainty: The Random-Walk Hypothesis	353	(3)
7.3 Empirical Application: Two Tests of the Random-Walk Hypothesis	356	(5)
7.4 The Interest Rate and Saving	361	(5)
7.5 Consumption and Risky Assets	366	(4)
7.6 Beyond the Permanent-Income Hypothesis	370	(10)
Problems	380	(6)
Chapter 8 INVESTMENT	386	(51)
8.1 Investment and the Cost of Capital	386	(3)
8.2 A Model of Investment with Adjustment Costs	389	(6)
8.3 Tobin's q	395	(1)
8.4 Analyzing the Model	396	(4)
8.5 Implications	400	(6)
8.6 Empirical Application: q and Investment	406	(3)
8.7 The Effects of Uncertainty	409	(4)
8.8 Kinked and Fixed Adjustment Costs	413	(4)
8.9 Financial-Market Imperfections	417	(11)
8.10 Empirical Application: Cash Flow and Investment	428	(5)
Problems	433	(4)
Chapter 9 UNEMPLOYMENT	437	(59)
9.1 Introduction: Theories of Unemployment	437	(2)
9.2 A Generic Efficiency-Wage Model	439	(5)
9.3 A More General Version	444	(4)
9.4 The Shapiro-Stiglitz Model	448	(12)
9.5 Implicit Contracts	460	(4)
9.6 Insider-Outsider Models	464	(3)
9.7 Hysteresis	467	(5)
9.8 Search and Matching Models	472	(9)
9.9 Empirical Applications	481	(8)
Problems	489	(7)
Chapter 10 INFLATION AND MONETARY POLICY	496	(63)
10.1 Inflation, Money Growth, and Interest Rates	497	(4)
10.2 Monetary Policy and the Term Structure of Interest Rates	501	(5)
10.3 The Dynamic Inconsistency of Low-Inflation Monetary Policy	506	(4)
10.4 Addressing the Dynamic-Inconsistency Problem	510	(10)
10.5 What Can Policy Accomplish?	520	(5)
10.6 Interest-Rate Rules and the Conduct of Policy	525	(8)
10.7 A Model for Analyzing Interest-Rate Rules	533	(5)
10.8 Seignorage and Inflation	538	(9)
10.9 The Costs of Inflation	547	(5)
Problems	552	(7)
Chapter 11 BUDGET DEFICITS AND FISCAL POLICY	559	(60)
11.1 The Government Budget Constraint	560	(7)
11.2 The Ricardian Equivalence Result	567	(2)
11.3 Ricardian Equivalence in Practice	569	(4)
11.4 Tax-Smoothing	573	(6)
11.5 Political-Economy Theories of Budget Deficits	579	(3)
11.6 Strategic Debt Accumulation	582	(10)
11.7 Delayed Stabilization	592	(6)
11.8 Empirical Application: Politics and Deficits in Industrialized Countries	598	(5)
11.9 The Costs of Deficits	603	(4)
11.10 A Model of Debt Crises	607	(6)
Problems	613	(6)
References	619	(37)
Author Index	656	(7)
Subject Index	663