Dynamic Macroeconomic Analysis : Theory and Policy in General Equilibrium

This book applies modern micro-founded macroeconomic models to some of the most important economic policy questions facing monetary and macroeconomic policy-makers. Technically rigorous and summarising major research breakthroughs, this book gathers specially commissioned chapters from leading experts and offers a road map to the future of macroeconomics.

Dynamic stochastic general equilibrium (DSGE) models have begun to dominate the field of macroeconomic theory and policy-making. These models describe the evolution of macroeconomic activity as a recursive sequence of outcomes based upon the optimal decision rules of rational households, firms and policy-makers. Whilst posing a micro-founded dynamic optimisation problem for agents under uncertainty, such models have been shown to be both analytically tractable and sufficiently rich for meaningful policy analysis in a wide class of macroeconomic problems, for example, monetary and fiscal policy, economic cycles and growth and capital flows. This volume collects specially commissioned papers from leading researchers, which pull together some of the key results in diverse areas. This book will promote research using optimising models and inform researchers, post-graduate students and economists in policy-oriented organisations of some of the key findings and policy implications.