Topics in Applied Macrodynamic Theory

1. Front Matter

   Pages I-XIX

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2. Period Models, Continuous Time and Applied Macrodynamics

   1. Period Models, Continuous Time and Applied Macrodynamics

      Pages 1-32

3. The Closed Economy

   1. Front Matter

      Pages 33-33

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   2. The AS–AD Framework: Origins, Problems and Progress

      Pages 35-89

   3. Wage–Price Dynamics: Basic Structural Form, Estimation and Analysis

      Pages 91-136

   4. Estimation and Analysis of an Extended AD–AS Model

      Pages 137-212

   5. Linking Goods with Labor Markets: Okun’s Law and Beyond

      Pages 213-283

4. The Open Economy

   1. Front Matter

      Pages 285-285

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   2. Exchange Rate and Stock Market Dynamics in a Two-Country Model

      Pages 287-320

   3. Macroeconomic Imbalances and Inflation Dynamics in a Mundell-Fleming-Tobin Framework

      Pages 321-371

   4. Currency Crises, Credit Rationing and Monetary Policy in Emerging Markets

      Pages 373-415

   5. Keynesian Dynamics and International Linkages in a Two-Country Model

      Pages 417-454

   6. Outlook: Supply Constraints in Demand-Driven Macromodels

      Pages 455-502

5. Back Matter

   Pages 503-512

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This book is about the study of topics in macro dynamics from an applied, empirical perspective. The modeling philosophy behind most of the chapters ofthisbookisofKeynesiannature,representinganattempttorevivethist- oreticalperspectiveontheworkingofthemacroeconomy. Themacroeconomic research pursued here is somewhat di?erent from the mainstream literature using the Dynamic Stochastic General Equilibrium (DSGE) approach as the basic modeling device. The main features of the latter are the assumptions of intertemporally optimizing agents, rational expectations, competitive m- kets and price mediated market clearing through su?ciently ?exible prices and wages. The New Keynesian approach to macroeconomics has, in the last decade or so, to a large extent, also adopted the DSGE framework, building on intertemporally optimizing agents and market clearing, but favoring more the concept of monopolistic competition, sticky wages and prices and nominal as well as real rigidities. An path breaking work of this type is the recent book by Woodford (2003). However, it is well known that the intertemporal approach of smoothly optimizing agents and fast adjustments in order to establish temporal or - tertemporal marginal conditions in the product market, labor and capital markets, has not been very successful to match certain stylized facts on those markets. A further de?ciency of those intertemporal decision models is that macroeconomic feedback e?ects—and their stabilizing or destabilizing impact on the macroeconomy—have rarely been considered in those models. Yet, those feedback mechanisms, relevant for the interaction of all three markets, have been theoretically and empirically explored since the 1930s.

• Economic Dynamics
• Inflation
• Inflation Dynamics
• Keynes
• Keynesian Business Cycle Theory
• Keynesian Macroeconomics
• Macrodynamic Theory
• Macrodynamics

• Dept. of Economics, Bielefeld University, Bielefeld, Germany

  Peter Flaschel

• Dept. of Economics, Magdeburg University, Magdeburg, Germany

  Gangolf Groh

• Bielefeld University and Macroeconomic Policy Institute (IMK) at the Hans Böckler Foundation, Düsseldorf, Germany

  Christian Proaño

• Dept. of Economics, New School, New York, USA

  Willi Semmler

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