Skip to Main Content

A Study in Monetary Macroeconomics

Online ISBN:
9780191845451
Print ISBN:
9780198807537
Publisher:
Oxford University Press
Book

A Study in Monetary Macroeconomics

Stefan Homburg
Stefan Homburg

Professor and Director

Professor and Director, Institute of Public Finance, Leibniz University, Hannover
Find on
Published online:
24 August 2017
Published in print:
13 July 2017
Online ISBN:
9780191845451
Print ISBN:
9780198807537
Publisher:
Oxford University Press

Abstract

The Great Recession of 2008/09 and its aftermath present a major challenge to macroeconomics. Many researchers think that prevailing models fail to grasp essential aspects of recent developments, including unprecedented monetary policies and interest rates at the zero lower bound. Approaches that focus on steady states, rational expectations, and individuals planning over infinite horizons are not suitable for analyzing such abnormal situations. This text does not criticize the traditional approach but aims at improvement. The study’s distinctive feature is a rich institutional structure that includes elements such as credit money, external finance, borrowing constraints, net worth, real estate, and commercial banks. To cope with such a complex setting, the text reduces rationality requirements but adheres to the method of dynamic general equilibrium (DGE) with optimizing agents and fully specified models. Results are derived from mathematical reasoning and simulations. Starting with a simple baseline model, the argument is developed step by step in a unified framework that covers almost everything of interest for monetary macroeconomists. The topics discussed include the superneutrality of money, the Tobin effect, monetary policy under sticky prices and wages, but also liquidity traps with borrowing constraints, Fisherian debt-deflations, housing cycles, and environments with excess bank reserves. The text addresses researchers worldwide and may prove useful for teaching postgraduate and advanced graduate courses. The principle objective is to demonstrate that a “not-too-rational” DGE approach makes it possible to develop clean models that work outside steady states and are appropriate for answering macroeconomic questions of actual interest.

Contents
Close
This Feature Is Available To Subscribers Only

Sign In or Create an Account

Close

This PDF is available to Subscribers Only

View Article Abstract & Purchase Options

For full access to this pdf, sign in to an existing account, or purchase an annual subscription.

Close