Models for Dynamic Macroeconomics

Models for Dynamic Macroeconomics provides the advanced student with key methodological tools for the dynamic analysis of a core selection of macroeconomic phenomena, including consumption and investment choices, employment and unemployment outcomes, and economic growth. The technical treatment of these tools will enable the student to handle current journal literature, while not assuming any particular familiarity with advanced analytical tools or mathematical notions. As these tools are introduced, they are related to particular applications to illustrate their use. Each chapter includes exercises which propose extensions to the model discussed in the text as well as end of chapter review exercises designed to consolidate learning. All exercise solutions are provided at the end of the book and further reading is discussed at the end of each chapter. By bridging the gap between undergraduate economics and modern microfounded macroeconomic research, this book will be of interest to graduate students in economics, and as a technical reference for economic researchers.

Table of Contents:
Preface 1: Dynamic Consumption Theory 1.1 Permanent Income and Optimal Consumption 1.2 Empirical Issues 1.3 The Role of Precautionary Saving 1.4 Consumption and Financial Returns Appendix A1: Dynamic Programming Review Exercises Further Reading References 2: Dynamic Models of Investment 2.1 Convex Adjustment Costs 2.2 Continuous-Time Optimization 2.3 Steady-State and Adjustment Paths 2.4 The Value of Capital and Future Cash Flows 2.5 Average Value Capital 2.6 A Dynamic IS-LM Model 2.7 Linear Adjustment Costs 2.8 Irreversible Investment Under Certainty Appendix A2: Hamiltonian Optimization Methods Review Exercises Further Readings References 3: Adjustment Costs in the Labor Market 3.1 Hiring and Firing Costs 3.2 The Dynamics of Employment 3.3 Average Long-Run Effects 3.4 Adjustment Costs and Labor Allocation Appendix A3: (Two-State) Markov Processes Review Exercises Further Reading References 4: Growth in Dynamic General Equilibrium 4.1 Production, Savings, and Growth 4.2 Dynamic Optimization 4.3 Decentralized Production and Investment Decisions 4.4 Measurement of "Progress": the Solow Residual 4.5 Endogenous Growth and Market Imperfections Review Exercises Further Exercises References 5: Coordination and Externalities in Macroeconomics 5.1 Trading Externalities and Multiple Equilibria 5.2 A Search Model of Money 5.3 Search Externalities in the Labor Market 5.4 Dynamics 5.5 Externalities and Efficiency Review Exercises Further Reading References Answers to Exercises

About the Author :
Fabio-Cesare Bagliano is currently Professor of Economics in the Faculty of Economics, University of Tunrin, having previously held other teaching positions in Turin and Teramo (Italy); in 1987-90 he held a research position at the Centre for Economic Performance (London School of Economics and Political Science). He is Associate Editor of Giornale degli Economisti e Annali di Economia and has published in the Journal of Banking and Finance, the European Economic Review, the Journal of Macroeconomics, and other academic journals and books. Giuseppe Bertola is Professor of Economics at the University of Turin. He has previously held other teaching positions in Turin and visiting positions in various places, including Assistant Professor and Assistant Director of the International Finance Section, Princeton University. He is a Managing Editor of Economic Policy and Condirettore of Giornale degli Economisti e Annali di Economia. His work is published in the Review of Economic Studies, American Economic Review, the European Economic Review, and other academic journals and books.

Review :
`'This excellent book, written by two leaders of their field, provides a rigorous introduction to modern dynamic macroeconomics. It provides the modern perspective on consumption, investment and labor markets before putting it all together in models of general equilibrium as well as models of coordination failures. The book provides a much needed stepping stone so that students can cross the gap between undergraduate textbooks and the modern literature. I recommend it highly for serious advanced undergraduate courses, as a basic text for graduate courses, and as a reference text.'' Harald Uhlig, Humboldt-Universität zu Berlin