Advanced Macroeconomics (The Mcgraw-Hill Series in Economics)

An Introduction to the Study of Macroeconomics at an Advanced Level

The fourth edition of Romer's Advanced Macroeconomics presents the major theories concerning the central questions of macroeconomics. In areas ranging from economic growth and short-run fluctuations to the natural rate of unemployment and fiscal policy, formal models are used to present and analyze key ideas and issues. The theoretical analysis is supplemented by examples of relevant empirical work, illustrating the ways that theories can be applied and tested.

The book has been revised more extensively than ever before. There are changes throughout to incorporate new research, eliminate inessential material, and further improve the presentation. Key revisions include:

• There are now separate chapters on endogenous growth (Chapter 3) and cross-country income differences (Chapter 4). Chapter 3 includes a careful presentation of Paul Romer’s now-classic model of endogenous technological change, and Chapter 4 takes the reader to the frontiers of empirical research on the underlying sources of the enormous differences in standards of living among countries.
• Chapters 6 and 7 on short-run fluctuations when prices are not fully flexible have been completely redone. The analysis is grounded in microeconomic foundations from the outset. The chapters build from simple models to the canonical three-equation new Keynesian model (the new Keynesian IS curve, the new Keynesian Phillips curve, and an interest-rate rule) and ingredients of modern dynamic stochastic general-equilibrium models of fluctuations.
• The revisions to Chapters 6 and 7 carry over to the analysis of monetary policy in Chapter 11. This chapter has been entirely reorganized and includes a careful treatment of optimal policy in forward-looking models.
• An epilogue describes some of the main issues that the financial and macroeconomic crisis that began in 2008 raises for macroeconomics and discusses how the crisis may change the field.