Macroeconomic theory.

Abstract

The main chapters of this book developed out of the core material of a graduate course in Macroeconomic Theory which was given at Bielefeld University over several years. At first the objective was to present the microeconomic foundations of macroeconomic analysis for an economy in the short run deriving prices, wages, output, and employment for a monetary economy within the framework of temporary general equilibrium theory emphasizing Keynesian features and contrasting the results under disequilibrium with those of Classical Macroeconomics. As new results resolving dynamic issues were obtained for both the disequilibrium as well as for the equilibrium modeling, comparisons between the two approaches were possible within the same general model. Emphasis of the course material shifted gradually from only a comparative statics analysis to a joint presentation of a static and a dynamic analysis side by side. In the end a synthesis was obtained of extending the traditional intertemporal sequential modeling to a full dynamic analysis for the equilibrium and the disequilibrium description of temporary allocations. This allows an analysis of macroeconomic issues with and without noise, in particular the consequences of stationary fiscal policies on allocations, on the quantity of money, as well as on the stability of the evolution of the economy.