Introducing Advanced Macroeconomics Growth and Business Cycles - PETER SORENSEN,Hans Whitta-Jacobsen

PETER SORENSEN, Hans Whitta-Jacobsen
(University of Copenhagen, University of Copenhagen)

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About the book

Aimed at the advanced undergraduate student, Introducing Advanced Macroeconomics: Growth and Business Cycles bridges the gap between intermediate macroeconomics texts and more advanced macroeconomics texts, something not currently available in the market. The text seeks to give students a thorough understanding of some fundamental workhorse models in macroeconomics and to introduce them to methods of formal macroeconomics analysis, without requiring too many technical skills. The first half of the book focuses on macroeconomics for the long run, introducing and developing the basic Solow model. While the second half of the book deals with the economy in the short run, focussing on the explanation of business fluctuations.

Key features

Focus on elementary and fundamental models.Rather than offering superficial coverage of a number of topics and different model types, this book provides a focused in-depth treatment of a limited number of basic macroeconomic models.

Empirical motivation and policy orientation. This book reviews the stylised empirical facts to be explained by the models and systematically confronts the model predictions with empirical data for several countries. The book also highlights the implications of the various models for economics policy.

Respect for rigour, but avoidance of unnecessary technicalities. This book offers an introduction to the methods of formal macroeconomics analysis. The combination of text and exercises teaches students how to set up and analyse simple macroeconomic models. However, unnecessary technicalities are avoided, and a balance between mathematical and graphical analysis is maintained. Students are only required to have some training in basic calculus and some familiarity with first-order difference equations. An appendix provides an accessible explanation of the OLS method of regression analysis to help students understand the empirical parts of the book.

A modernised exposition of growth theory. While carefully covering the conventional Solow model of economic growth and its extension allowing for human capital accumulation, the book offers two further novel extensions. First, it presents a Solow growth model of an open economy, providing a basis for a discussion of the effects of international capital mobility. Second, the book develops a simple Solow model with scarce natural resources, highlighting some of the issues in the debate on the environmental limits to growth.

Coherence and Internal Consistence. The Short Run and Long Run sections of this book can be used independently by the reader. It is, however, clear throughout how different models from different chapters and parts of this book can be linked to one another, providing the reader with greater flexibility when using this book.

Writing Style. The clear and lucid writing style of this text succeeds in clearly illustrating key points to the readers.

About the author

Peter Birch Sorensen and Hans Jorgen Whitta-Jacobsen are both at the University of Copenhagen, Denmark.

Table of contents

Chapter 1 Macroeconomics for the Long Run and for the Short Run

Book One: The Long Run: Economic Growth, Long Run Unemployment, and Structural Economic Policy

Part I Basic Theory and Empirics about Prosperity and Growth

Chapter 2 Some Facts about Prosperity and Growth
Chapter 3 Capital Accumulation and Growth: The Basic Solow Model
Chapter 4 Wealth Accumulation and Capital Mobility: The Solow Model for a Small Open Economy

Part II Exogenous Growth

Chapter 5 Technological Progress and Growth: The General Solow Model
Chapter 6 Education and Growth: The Solow Model with Human Capital
Chapter 7 Limits to Growth? The Solow Model with Scarce Natural Resources

Part III Endogenous Growth

Chapter 8 Productive Externalities and Endogenous Growth
Chapter 9 R&D-Based Models of Endogenous Growth: Macroeconomic Modelling
Chapter 10 R&D-Based Models of Endogenous Growth: Micro Foundations

Part IV Structural Unemployment

Chapter 11 Some Facts and Introductory Theory about Unemployment
Chapter 12 Efficiency Wages and Unemployment
Chapter 12 Trade Unions and Unemployment

Book Two The Short Run: Economic Fluctuations, Short Run Unemployment, and Stabilisation Policy

Chapter 14 The Economy in the Short Run: Some Facts about Business Cycles

Part V The Building Blocks for the Short Run Model

Chapter 15 Investment and Asset Prices
Chapter 16 Consumption, Income and Wealth
Chapter 17 Monetary Policy and Aggregate Demand
Chapter 18 Inflation, Unemployment and Aggregate Supply

Part VI The Short Run Model for the Closed Economy

Chapter 19 Explaining Business Cycles: Aggregate Supply and Aggregate Demand in Action
Chapter 20 Stabilization Policy: Why and How?
Chapter 21 Stabilization Policy with Rational Expectations
Chapter 22 The Limits to Stabilization Policy: Credibility, Uncertainty and Time Lags
Part VII The Short Run Model for the Open Economy

Chapter 23 Aggregate Demand and Aggregate Supply in the Open Economy
Chapter 24 The Open Economy with Fixed Exchange Rates
Chapter 25 The Open Economy with Flexible Exchange Rates
Chapter 26 The Choice of Exchange Rate Regime and the Theory of Optimum Currency Areas