Macroeconomics deals with the structure, behavior and performance of economies in their entirety. It concentrates on aggregate variables, such as output and income (gross domestic product), unemployment rates, price indices and inflation. It studies the structure and interrelations among economy-wide markets for output, labor, capital and financial instruments, and their implications for aggregate economic performance.
Macroeconomics mainly focuses on the determinants of long-run economic growth in living standards and the causes and implications of short-term fluctuations in economic aggregates.
This book is an advanced treatment of modern macroeconomics, using a sequence of dynamic general equilibrium models which are based on intertemporal optimization on the part of economic agents, such as households, firms and the government. The book also analyzes and discusses the role of monetary and fiscal policy in the context of such dynamic models.
The intertemporal approach, based on the use of dynamic general equilibrium models, is currently the dominant approach to macroeconomics. This approach is adopted in this text. The book is addressed to advanced undergraduate as well as first-year graduate students of economics. It is also suitable for trained economists who wish to deepen and broaden their grasp of dynamic macroeconomics. It highlights the potential but also some limitations of the modern intertemporal approach.
Fletcher School, Tufts University and Athens University of Economics and Business
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