A substantially revised new edition of a widely used text offering both an introduction to recursive methods & advanced material Recursive methods offer a powerful approach for characterizing & solving complicated problems in dynamic macroeconomics Recursive Macroeconomic Theory provides both an introduction to recursive methods & advanced material mixing tools & sample applications Only experience in solving practical problems fully conveys the power of the recursive approach & the book provides many applications This third edition offers substantial new material with three entirely new chapters & significant revisions to others The new content reflects recent developments in the field further illustrating the power & pervasiveness of recursive methods New chapters cover asset pricing empirics with possible resolutions to puzzles; analysis of credible government policy that entails state variables other than reputation; & foundations of aggregate labor supply with time averaging replacing employment lotteries Other new material
Includes:: a multi-country analysis of taxation in a growth model elaborations of the fiscal theory of the price level & age externalities in a matching model The book is suitable for both first- & second-year graduate courses in macroeconomics & monetary economics Most chapters conclude with exercises Many exercises & examples use Matlab programs which are cited in a special index at the end of the book