Table of Contents

Preface
1: Motivation for Macroeconomic Models
PART 1: THE MACROECONOMIC MODEL
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
PART 2: CONSUMPTION, INVESTMENT AND MONEY
7: Consumption and Investment
8: Money and Finance
PART 3: THE OPEN ECONOMY
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
PART 4: GROWTH
13: Exogenous Growth Theory
14: Endogenous and Schumpeterian Growth
PART 5: MICRO-FOUNDATIONS AND POLITICAL ECONOMY
15: New Keynesian Micro-foundations
16: Political Economy
PART 6: APPLICATIONS
17: Performance and Policy in Europe, the USA and Japan
18: Unemployment: institutions, shocks and policies

About the Author

Wendy Carlin is Professor of Economics at University College London and is a Research Fellow of the Centre for Economic Policy Research. She is managing editor of the Economics of Transition and has published widely on macroeconomics, institutions, and transition.
David Soskice is Research Professor at Duke University and at the Wissenschaftszentrum Berlin. He is Centennial Professor in the European Institute at the London School of Economics. He is Emeritus Fellow in Economics at University College, Oxford and has held visiting positions at the Australian National University and the universities of Berkeley, Johns Hopkins Bologna, Cornell, Pisa, Trento and Yale. He has published widely in economics, industrial relations, and political science.

Reviews

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