Foundations of Modern Macroeconomics – Ben J. Heijdra – 3rd Edition


The study of macroeconomics can seem a daunting project. The field is and sometimes poorly defined and there are a variety of competing approaches. It is easy for the senior bachelor and starting master to get lost in the forest of macroeconomics and the mathematics it uses extensively. Foundations of is a guide book for the interested and ambitious student.

Non-partisan in its approach, it deals with all the major topics, summarising the important approaches and providing the reader with a coherent angle on all aspects of thought. Each chapter deals with a separate area of macroeconomics, and each contains a summary section of key points and a further reading list. Using nothing more than undergraduate mathematical skills, it takes the from basic IS-LM style macro models to the state of the art literature on Dynamic Stochastic General Equilibrium, explaining the mathematical tricks used where they are first introduced.

Fully updated and substantially revised, this third edition of Foundations of now includes brand new chapters covering highly topical subjects such as dynamic programming, competitive sharing equilibria and the New Keynesian DSGE approach.

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Table of Contents

1. Review of the AD-AS model
2. The open economy
3. Dynamics in aggregate demand and supply
4. Perfect foresight and economic policy
5. Rational expectations and economic policy
6. The government budget deficit
7. A closer look at the labour market
8. Search in the labour market
9. Dynamic inconsistency in public and private decision making
10. Money
11. New Keynesian economics
12. Exogenous economic growth - Solow-Swan
13. Exogenous economic growth - Ramsey-Cass-Koopmans
14. Endogenous economic growth
15. Overlapping generations in continuous time
16. Overlapping generations in discrete time
17. Decision making in a stochastic environment
18. Dynamic schochastic general equilibrium - New classical models
19. Dynamic schochastic general equilibrium - New Keynesian models

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