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Recursive Macroeconomic Theory, fourth edition
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.
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.
1480 pages, Hardcover
First published August 21, 2000
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Displaying 1 - 2 of 2 reviews
May 7, 2020
[Review is for the fourth edition]
What more can be said. It is the gold standard of graduate macro for a reason. Extensive in the range of topics, from the standard dynastic neoclassical model with compete markets and no frictions, to various alternatives that deviate from this idealization. Topics range from mathematical preliminaries (Markov processes, filters, dynamic programming, etc.) and the basics of recursive competition equilibrium to Bewley models, Ramsey taxation problem, growth, labor search models, and so on.
I'm not a macro person for sure (I'm finishing the first year of a PhD program, with a primary field mostly likely in public economics), but I will say this is a worthwhile investment for any aspiring economist.
What more can be said. It is the gold standard of graduate macro for a reason. Extensive in the range of topics, from the standard dynastic neoclassical model with compete markets and no frictions, to various alternatives that deviate from this idealization. Topics range from mathematical preliminaries (Markov processes, filters, dynamic programming, etc.) and the basics of recursive competition equilibrium to Bewley models, Ramsey taxation problem, growth, labor search models, and so on.
I'm not a macro person for sure (I'm finishing the first year of a PhD program, with a primary field mostly likely in public economics), but I will say this is a worthwhile investment for any aspiring economist.
January 29, 2025
Probably the most advanced mainstream macro textbook. Advanced enough, so that you can get new research ideas right on your way.
Displaying 1 - 2 of 2 reviews