Dynamic Macroeconomics: Instability, Fluctuations, and Growth in Monetary Economies

Dynamic Macroeconomics: Instability, Fluctuations, and Growth in Monetary Economies

by Peter Flaschel, Reiner Franke, Willi Semmler
     
 

ISBN-10: 0262061910

ISBN-13: 9780262061919

Pub. Date: 06/25/1997

Publisher: MIT Press

Dynamic Macroeconomics is an attempt to revitalize the traditions of nonmarket clearing approaches to macroeconomics. Using sophisticated tools from dynamic analysis, the authors introduce a consistent, integrated framework for disequilibrium macroeconomic dynamics and explore its relationship to the competing--and currently dominant--equilibrium dynamics.The book

Overview

Dynamic Macroeconomics is an attempt to revitalize the traditions of nonmarket clearing approaches to macroeconomics. Using sophisticated tools from dynamic analysis, the authors introduce a consistent, integrated framework for disequilibrium macroeconomic dynamics and explore its relationship to the competing--and currently dominant--equilibrium dynamics.The book is organized into five parts. Part I covers background models of market-clearing and nonmarket-clearing approaches. Part II introduces short-run monetary models of macroeconomic fluctuations that build on the dynamic interaction of product, labor, and financial markets. Part III explores monetary instability in variants with capital accumulation and growth. Part IV explores supply and demand side Keynesian business cycles and monetary-type growth models. Part V considers the role of the financial sector as a source of instability and fluctuations.

The MIT Press

Product Details

ISBN-13:
9780262061919
Publisher:
MIT Press
Publication date:
06/25/1997
Series:
Studies in Dynamical Economic Science
Edition description:
New Edition
Pages:
469
Product dimensions:
6.30(w) x 9.10(h) x 1.20(d)
Age Range:
18 Years

Table of Contents

Series Foreword ix(2)
Preface xi
1 General Introduction
1(18)
1.1 Introduction
1(1)
1.2 Market--Clearing Approach to Dynamic Macroeconomics
2(2)
1.3 Nonmarket--Clearing Approach to Dynamic Macroeconomics
4(2)
1.4 On Stylized Empirical Facts
6(1)
1.5 Perspective of the Book
7(3)
1.6 A Brief Outlook
10(3)
1.7 Dynamic Tools and Econometric Issues
13(1)
1.8 Notation and Abbreviations
14(5)
I Market Mechanisms and Macrodynamics: Basic Models 19(108)
2 Micro--and Macroeconomic Adjustment Mechanisms: A Brief Overview
23(10)
2.1 Introduction
23(1)
2.2 Microeconomic Adjustment Mechanisms
23(4)
2.3 Macroeconomic Adjustment Mechanisms
27(6)
3 Market Mechanisms and Boundedness of Market Fluctuations
33(28)
3.1 Introduction
33(1)
3.2 Walrasian Price--Quantity Adjustments
34(10)
3.3 Keynesian and Composite Adjustment Processes
44(4)
3.4 Proportional and Derivative Control
48(9)
3.5 Concluding Remarks
57(1)
3.6 Appendix: Market Adjustments and the Newton Method
58(3)
4 Non-Neoclassical Variants of Dynamic Macroeconomics
61(42)
4.1 Introduction
61(2)
4.2 Instability in Real and Monetary Models
63(10)
4.3 Boundedness in Real and Monetary Models
73(8)
4.4 Classical Growth Dynamics and Viability
81(9)
4.5 Supply--Driven Keynesian Growth Dynamics
90(6)
4.6 Effective Demand in Classical Growth Dynamics
96(5)
4.7 Some Conclusions
101(2)
5 Neoclassical Variants of Dynamic Macroeconomics
103(24)
5.1 Introduction
103(2)
5.2 The Solow Version and the Labor Market
105(4)
5.3 The Intertemporal Version of the Solow Model
109(3)
5.4 Stochastic Growth and Equilibrium Business Cycles
112(3)
5.5 Endogenous Technical Change and Growth
115(6)
5.6 Growth, Money, and Finance
121(5)
5.7 Concluding Remarks
126(1)
II Price Flexibility, Nominal Rigidity, and Macrodynamics 127(56)
6 Wage Flexibility and Stability in the Short Run
131(16)
6.1 Introduction
131(2)
6.2 The Walrasian Adjustment Process
133(4)
6.3 The Keynesian Adjustment Process
137(6)
6.4 Conclusion
143(1)
6.5 Mathematical Appendix
144(3)
7 Price Flexibility and Instability in the Medium Run
147(36)
7.1 Introduction
147(2)
7.2 In Defense of Adaptive Expectations
149(7)
7.3 Adaptive Expectations and Extrapolative Regression Forecasts
156(6)
7.4 Basic Features of the Tobin and the Sargent Model
162(4)
7.5 The Case of Adaptive Expectations
166(6)
7.6 The Case of Myopic Perfect Foresight
172(4)
7.7 Conclusion
176(1)
7.8 Appendix: Mathematical Proofs
177(6)
III AD-AS and IS-LM Models of Monetary Growth 183(84)
8 Keynesian Growth Dynamics, Perfect Foresight, and Viability
187(40)
8.1 Introduction
187(2)
8.2 RE Propositions in Fully Specified AD-AS Growth Models: A Reconsideration
189(7)
8.3 Hyperperfect Foresight: An Exceptional Case in an Exceptional Environment
196(14)
8.4 Myopic Perfect Foresight and Cyclical IS-LM Growth
210(7)
8.5 IS-LM Growth Dynamics and Viability
217(7)
8.6 Concluding Remarks
224(3)
9 Adaptive Expectations or Myopic Perfect Foresight: The Wrong Alternative
227(40)
9.1 Introduction
227(6)
9.2 The AD-AS Growth Model in Discrete Time
233(5)
9.3 A Numerical Analysis of the AE Case
238(3)
9.4 AE and MPF I: Cases of No Difference
241(6)
9.5 AE and MPF II: Why Can There Be a Difference?
247(7)
9.6 AE and MPF III: The Basic Fallacy
254(8)
9.7 Appendix: Forecasted Price Changes and Adaptive Learning
262(5)
IV Supply and Demand Side Models of Keynesian Growth Dynamics 267(68)
10 Supply Side Keynesianism and the Classical Growth Cycle
271(28)
10.1 Introduction
271(3)
10.2 A General Keynes--Wicksell Model of Monetary Growth
274(4)
10.3 Local Stability Analysis
278(1)
10.4 The Neoclassical Case: Savings and Monetary Growth
279(2)
10.5 The Classical Case: Cross--Dual Monetary Growth Dynamics
281(7)
10.6 Conclusions
288(1)
10.7 Appendix 1: Stein (1982)
289(3)
Appendix 2: Proofs of Theorems 10.1-10.3
292(7)
11 Inflation, Distribution, and Cycles in a Keynesian Monetary Growth Model
299(36)
11.1 Perspective of the Model
299(6)
11.2 Formulation of the Model
305(6)
11.3 Local Analysis
311(5)
11.4 Simulation Results for the Original Model
316(5)
11.5 A Modification of Adaptive Expectations
321(5)
11.6 Simulation Results with Flexible Adaptive Expectations
326(6)
11.7 Conclusion
332(3)
V Finance, Long-Term Expectations, and Macro Fluctuations 335(66)
12 Finance, Expectations Dynamics, and Macro Fluctuations
339(34)
12.1 Introduction
339(2)
12.2 Investment and Long-Term Expectations
341(7)
12.3 The IS-LM Configuration
348(3)
12.4 Analysis of Temporary Equilibria
351(6)
12.5 Long-Run Dynamics
357(6)
12.6 Computer Simulations
363(5)
12.7 Conclusion
368(1)
12.8 Mathematical Appendix
369(4)
Trends and Cycles in the Capital Structure
373(24)
13.1 Introduction
373(3)
13.2 A Simple Dynamic Approach
376(2)
13.3 The Dynamics of the Capital Structure: Constant Trend
378(8)
13.4 The Dynamics of the Capital Structure: Trend Variations
386(3)
13.5 Conclusion
389(3)
13.6 Appendix
392(5)
14 Conclusions
397(4)
Notes 401(26)
References 427(20)
Index 447

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