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Imperfections, Institutions, and Policies

Wendy Carlin and David Soskice

15 December 2005

ISBN: 9780198776222

856 pages

In Stock

Price: £74.99



Macroeconomics makes modern macroeconomics with its focus on imperfect competition, interest-rate setting central banks, and knowledge - based growth accesible to undergraduates. It provides micro-foundations for the Philips curve, for persistent involuntary unemployment, for aggregate consumption and investment behaviour, and for inflation-targetting. It is based on the mainstream monetary macro model now used widely by academics and policy makers and shows students how to use it to understand a broad range of real-world macroeconomic behaviour and policy issues. It is also designed to appeal to graduate students, non-specialists in macroeconomics, professional economists and those from related disciplines who want a guide to the complexities of modern macroeconomics and to understand contemporary policy debates.

  • Provides comprehensive coverage of aggregate demand and supply within an integrated model fully incorporating open economy aspects.
  • Provides a rigorous, yet accessible, treatment of growth theory and debates about convergence. Shows how a simplified version of the Schumpeterian growth model works and how it can be used to address a rich variety of questions about growth and institutions.
  • Gives students the economics background necessary for accessing advanced macroeconomics.
  • Provides comprehensive coverage of aggregate demand and supply sides of the closed and open economy within an integrated model, giving students a better understanding of all economies.
  • Check-list questions focus on common confusions and misunderstandings, and problems and open-ended questions help students develop deeper understanding and greater confidence.
  • Is unique in providing a self-contained introduction to the growing field of political economy.
  • Online Resource Centre with exercises and checklist questions for students and password-protected solutions and diagrams from the text for lecturers.

About the Author(s)

Wendy Carlin, Professor of Economics, University College London, and David Soskice, Research Professor of Political Science, Duke University and Wissenschaftszentrum Berlin

Table of Contents

    1:Motivation for Macroeconomic Models
    2:Aggregate Demand, Aggregate Supply and Business Cycles
    3:Inflation, Unemployment and Monetary Rules
    4:Labour Markets and Supply-Side Policies
    5:Monetary Policy
    6:Fiscal Policy
    7:Consumption and Investment
    8:Money and Finance
    9:The open economy in the short run
    10:Inflation and Unemployment in the Open Economy
    11:Shocks and Policy Responses in the Open Economy
    12:Interdependent Economies
    13:Exogenous Growth Theory
    14:Endogenous and Schumpeterian Growth
    15:New Keynesian Micro-foundations
    16:Political Economy
    17:Performance and Policy in Europe, the USA and Japan
    18:Unemployment: institutions, shocks and policies


"When teaching intermediate macroeconomics in Harvard, I deeply felt that existing textbooks were all lacking: 1) proper microeconomic foundations linking important notions such as the Keynesian consumption function, the investment accelerator, the Phillips curve, the possibility of persistent (involuntary) unemployment, to precise sources of imperfections in the product, labor, or financial markets; 2) a suitable treatment of growth theory that can shed light on observed convergence and divergence patterns across countries and also on how growth policies should be designed in various countries at different stages of development. Being the first comprehensive attempt at filling these gaps, the Carlin-Soskice textbook should be used by any instructor who wants to bring her students to the frontier of modern macroeconomics while at the same time remaining fully accessible to a broad undergraduate audience. Philippe Aghion, Robert C. Waggoner Professor of Economics, Harvard University"

"At last, an advanced undergraduate book which maps theory to facts. The theory, from the new Keynesian model of fluctuations to Schumpeterian models of growth, is sound. The applications, from European unemployment to the Japanese slump, highly revealing. You will enjoy every chapter, and become a good macroeconomist in the process. Olivier Blanchard, Class of 1941 Professor, Massachusetts Institute of Technology"

"The best way to learn economics is to have a textbook which develops a theoretical framework interactively with practical questions. Macroeconomics: Imperfections, Institutions and Policies does just this. The book is based on the mainstream monetary macro model which is now widely used by both academics and policy-makers. In a straightforward manner, it shows how this model can be used to address an enormous variety of practical questions without heavy use of mathematical technique. Stephen Nickell, School Professor of Economics, LSE; Member of the Monetary Policy Committee, Bank of England"

"Imperfect competition, knowledge-based growth, inflation-targeting central banks and many other central features of modern economic systems have recently been integrated into the heart of macroeconomic theory. Carlin and Soskice do the profession a great service by writing a textbook that makes these developments accessible to undergraduates. The book presents macroeconomics at its best - as a useful framework for analyzing important questions. Peter Howitt, Lyn Crost Professor of Social Sciences, Brown University"

"What makes Carlin and Soskice invaluable is both their clarity and their commitment to helping the reader understand the intuitions that lie behind the models. Furthermore, there is constantly an attempt to make the work relevant to practical questions of public policy. They tackle the impact of German Reunification, EMU, British economic performance, the 1990s US boom, and the long-standing Japanese recession. There is a major final chapter addressing the issues of unemployment, especially among the larger nations of Continental Europe. The authors approach these questions through the penetrating analytical lens of their framework, critically address the empirical evidence and come up with sometimes novel conclusions to the conventional wisdom. Professor John Van Reenen Director, Centre for Economic Performance, London School of Economics"

"If, like me, you've been waiting a long time for the successor to Macroeconomics and the Wage Bargain, you will not be disappointed."

"Macroeconomics needs to be exciting and contemporary. Too often it becomes an area of difficulty and confusion for students. This book is to be welcomed for its very clear vision of what contemporary macroeconomics is about and its careful exposition leading the student to this. Dr Mary Gregory, Oxford University"