Dynamic Macroeconomic Theory

by Thomas J. Sargent

Book Overview

The tasks of macroeconomics are to interpret observations on economic aggregates in terms of the motivations and constraints of economic agents and to predict the consequences of alternative hypothetical ways of administering government economic policy. General equilibrium models form a convenient context for analyzing such alternative government policies. In the past ten years, the strengths of general equilibrium models and the corresponding deficiencies of Keynesian and monetarist models of the 1960s have induced macroeconomists to begin applying general equilibrium models.

This book describes some general equilibrium models that are dynamic, that have been built to help interpret time-series of observations of economic aggregates and to predict the consequences of alternative government interventions. The first part of the book describes dynamic programming, search theory, and real dynamic capital pricing models. Among the applications are stochastic optimal growth models, matching models, arbitrage pricing theories, and theories of interest rates, stock prices, and options. The remaining parts of the book are devoted to issues in monetary theory; currency-in-utility-function models, cash-in-advance models, Townsend turnpike models, and overlapping generations models are all used to study a set of common issues. By putting these models to work on concrete problems in exercises offered throughout the text, Thomas Sargent provides insights into the strengths and weaknesses of these models of money. An appendix on functional analysis shows the unity that underlies the mathematics used in disparate areas of rational expectations economics.

This book on dynamic equilibrium macroeconomics is suitable for graduate-level courses; a companion book, Exercises in Dynamic Macroeconomic Theory, provides answers to the exercises and is also available from Harvard University Press.

• Format: Hardcover
• Language: English
• ISBN: 0674218779
• ISBN13: 9780674218772
• Release Date: February 1987
• Publisher: Harvard University Press
• Length: 384 Pages
• Weight: 1.56 lbs.
• Dimensions: 1.2" x 6.4" x 9.6"

Customer Reviews

Still a Useful Introduction

Although Ljungqvist's & Sargent's Recursive Macroeconomic Theory has surpassed it as the standard graduate macroeconomics text, I found this earlier text by Sargent more useful for understanding the basics of dynamic programming. (Nor am I alone among my fellow grad students.) If you're pursuing a PhD in Economics, it may still have a place on your bookshelf.

Outstanding for PhD macroeconomists!

Sargent is a leader in modern macroeconomic research. Anybody that is working toward a PhD in Economics with a concentration in Macroeconomics ought to study this book. Other people are quite likely to find the book to be much too difficult and abstract.