## Macroeconomic TheoryMacroeconomic Theory, in its first edition, was widely adopted for use as a graduate text; this updated and expanded version should find even greater popularity as a text and as a research reference. It has been substantially revised to include three entirely new chapters: The Consumption Function, Government Debt and Taxes, and Dynamic Optimal Taxation. Significant additions have been made to three of the original chapters dealing with difference equations, stochastic difference equations, and investment under uncertainty.Key Features* This book has been substantially revised to include three entirely new chapters on consumption, government debt and taxes, and dynamic optimal taxation* Significant additions have been made to three of the original chapters dealing with difference equations, stochastic difference equations, and investment under uncertainty |

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### Contents

THE CLASSICAL MODEL | 6 |

THE KEYNESIAN MODEL | 46 |

The Firms Optimization Problem | 74 |

Copyright | |

20 other sections not shown

### Common terms and phrases

adaptive expectations aggregate demand aggregate supply analysis assets assume assumption budget constraint capital stock changes classical model coefficient constant consumption function covariance covariogram demand schedule determined difference equation disposable income dynamic Economic effect employment endogenous variables Euler equation exogenous expected firm firm's formula given households implies increase indifference curves inflation initial interest rate investment schedule jump Keynesian model labor supply lag operator lagged least squares linear linear least squares LM curve macroeconomic marginal product maximize monetary authority money supply money wage Notice open-market operations optimal orthogonal output parameters paths Phillips curve Pigou effect portfolio balance positive price level production function random variables ratio real rate real variables real wage reduced form regression right-hand time derivative rise satisfied sequence serially correlated slope solution solve spectrum stationary steady-state stochastic process Substituting Suppose theorem theory transversality condition variance vector