Ecomies are constantly in flux, and ecomists have long sought reliable means of analyzing their dynamic properties. This book aims to provide a succinct and accessible exposition of modern dynamic (or intertemporal) macroecomics. The authors use a microecomics-based general equilibrium framework, specifically the overlapping generations model, which assumes that in every period there are two generations which overlap. This model allows the authors to describe ecomies over time and to employ traditional welfare analysis to judge the effects of various policies. By choosing to keep the mathematical level simple and to use the same modelling framework throughout, the authors are able to address many subtle ecomic issues. They analyze savings, social security systems, the determination of interest rates and asset prices for different types of assets, Ricardian equivalence, business cycles, chaos theory, investment, growth, and a variety of monetary phemena. Each result is illustrated with analytical derivations, graphically, and by worked-out examples. Exercises, which are strategically placed, are an integral part of the book.
George McCandless is an economist at the Central Bank of Argentina.