Big Ideas in Macroeconomics: A Nontechnical View

by Kartik B. Athreya

Overview

An accessible description of modern macroeconomics, and a defense of its policy relevance.

Macroeconomists have been caricatured either as credulous savants in love with the beauty of their mathematical models or as free-market fundamentalists who admit no doubt as to the market's wisdom. In this book, Kartik Athreya draws a truer picture, offering a nontechnical description of prominent ideas and models in macroeconomics, and arguing for their value as interpretive tools as well as their policy relevance. Athreya deliberately leaves out the technical machinery, providing an essential guide to the sometimes abstract ideas that drive macroeconomists' research and practical policy advice.

Athreya describes the main approach to macroeconomic model construction, the foundational Walrasian general-equilibrium framework, and its modern version, the Arrow-Debreu-McKenzie (ADM) model. In the heart of the book, Athreya shows how the Walrasian approach shapes and unifies much of modern macroeconomics. He details models central to ongoing macroeconomic analyses: the neoclassical and stochastic growth models, the standard incomplete-markets model, the overlapping-generations model, and the standard search model. Athreya's accessible primer traces the links between the views and policy advice of modern macroeconomists and their shared theoretical approach.

Product Details

ISBN-13:	9780262528306
Publisher:	MIT Press
Publication date:	08/21/2015
Series:	The MIT Press
Edition description:	New Edition
Pages:	432
Product dimensions:	5.90(w) x 8.90(h) x 0.80(d)
Age Range:	18 Years

About the Author

Kartik B. Athreya is Executive Vice President and Director of Research at the Federal Reserve Bank of Richmond and an Associate Editor of the Journal of Economic Dynamics and Control.

Table of Contents

Acknowledgments ix

Introduction 1

1 The Modern Macroeconomic Approach and the Arrow-Debreu-McKenzie Model 11

2 Prices, Efficiency, and Macroeconomics 47

3 Macroeconomists, Efficiency, and Inequality 121

4 Macroeconomic Shortcuts 157

5 Benchmark Macroeconomic Models and Policy Advice 207

6 Macroeconomic Theory and Recent Events 315

Notes 369

References 391

Index 409

What People are Saying About This

Endorsement

The first year of graduate macroeconomics is hard for aspiring economists and demands much of their instructors. But matters just became easier. Kartik Athreya's beautiful book summarizes the main ideas in macroeconomics with lucid prose and insightful commentary. Graduate students can peek at it to understand the big picture, and faculty can learn a thing or two from it about why we teach what we teach. I have read the book twice, cover to cover, and each time it helped me to rethink many of the things I thought I knew. Furthermore, adventurous undergraduates, economists who have lost touch with the frontier of macro, and curious readers in general will find in this slim volume a truly wonderful and nontechnical summary of the 'rules of the game' for our field.

—Jesús Fernández-Villaverde, University of Pennsylvania

From the Publisher

This fine book succeeds very nicely at its stated task: to explain the standard macroeconomic theory used by central banks around the world without equations. This book is complex and sophisticated, yet clearly and transparently written. The author is honest concerning the weaknesses of this model, but confident that most can be overcome in the future. If you have heard the chorus of critics since the financial crisis of 2008, and if you are serious about understanding the issues, this is a good place to start.

—Herbert Gintis, Santa Fe Institute

Using only the English language, Kartik Athreya conveys to a nonspecialist audience what modern macroeconomists do, why we do it using specific rules of engagement, and why we end up thinking what we think. Big Ideas in Macroeconomics is to my knowledge the only book of its kind.

—Mark Huggett, Professor of Economics, Georgetown University

The first year of graduate macroeconomics is hard for aspiring economists and demands much of their instructors. But matters just became easier. Kartik Athreya's beautiful book summarizes the main ideas in macroeconomics with lucid prose and insightful commentary. Graduate students can peek at it to understand the big picture, and faculty can learn a thing or two from it about why we teach what we teach. I have read the book twice, cover to cover, and each time it helped me to rethink many of the things I thought I knew. Furthermore, adventurous undergraduates, economists who have lost touch with the frontier of macro, and curious readers in general will find in this slim volume a truly wonderful and nontechnical summary of the 'rules of the game' for our field.

—Jesús Fernández-Villaverde, University of Pennsylvania

Mark Huggett

Using only the English language, Kartik Athreya conveys to a nonspecialist audience what modern macroeconomists do, why we do it using specific rules of engagement, and why we end up thinking what we think. Big Ideas in Macroeconomics is to my knowledge the only book of its kind.

Herbert Gintis

This fine book succeeds very nicely at its stated task: to explain the standard macroeconomic theory used by central banks around the world without equations. This book is complex and sophisticated, yet clearly and transparently written. The author is honest concerning the weaknesses of this model, but confident that most can be overcome in the future. If you have heard the chorus of critics since the financial crisis of 2008, and if you are serious about understanding the issues, this is a good place to start.