Recursive Macroeconomic Theory

Recursive methods offer a powerful approach for characterizing and solving complicated problems in dynamic macroeconomics. Recursive Macroeconomic Theory provides both an introduction to recursive methods and advanced material, mixing tools and sample applications. The second edition contains substantial revisions to about half the original material, and extensive additional coverage appears in seven chapters new to this edition. The updated and added material covers exciting new topics that further illustrate the power and pervasiveness of recursive methods.

Significant improvements to original chapters include a better treatment of the existence of recursive equilibria, an enhanced account of the supermartingale convergence theorem, and an extended treatment of an optimal taxation problem in an economy in which there are incomplete markets. Completely new coverage in the second edition includes an introductory chapter, which gives an overview of the themes uniting the diverse topics treated throughout the book. Two new chapters offer a self-contained account of the optimal growth model and some of its basic applications in macroeconomics and public finance. Other new chapters cover such topics as how to formulate and compute Stackelberg or Ramsey plans in linear economies, sustainable risk-sharing equilibria without commitment, and the application of recursive contracts to topics in international trade. Most chapters conclude with exercises and the book includes two technical appendixes covering functional analysis and control and filtering.

PART I THE IMPERIALISM OF RECURSIVE METHODS
Ch.1 Overview

PART II TOOLS
Ch.2 Time Series
Ch.3 Dynamic Programming
Ch.4 Practical Dynamic Programming
Ch.5 Linear-Quadratic Dynamic Programming
Ch.6 Search, Matching, and Unemployment

PART III COMPETITIVE EQUILIBRIA AND APPLICATIONS
Ch.7 Recursive (Partial) Equilibrium
Ch.8 Equilibrium with Complete Markets
Ch.9 Overlapping Generations Models
Ch.10 Ricardian Equivalence
Ch.11 Fiscal Policies in the Growth Model
Ch.12 Recursive Competitive Equilibria
Ch.13 Asset Pricing
Ch.14 Economic Growth
Ch.15 Optimal Taxation with Commitment

PART IV THE SAVINGS PROBLEM AND BEWLEY MODELS
Ch.16 Self-Insurance
Ch.17 Incomplete Markets Models

PART V RECURSIVE CONTRACTS
Ch.18 Dynamic Stackelberg Problems
Ch.19 Insurance Versus Incentives
Ch.20 Equilibrium without Commitment
Ch.21 Optimal Unemployment Insurance
Ch.22 Credible Government Policies
Ch.23 Two Topics in International Trade

PART VI CLASSICAL MONETARY ECONOMICS AND SEARCH
Ch.24 Fiscal-Monetary Theories of Inflation
Ch.25 Credit and Currency
Ch.26 Equilibrium Search and Matching

PART VII TECHNICAL APPENDIXES
A. Functional Analysis
B. Control and Filtering