Extract

The overlapping generations model of Samuelson, Diamond and Allais has been for three decades an important instrument of policy analysis. However, the role played by the demographic structure in why and how economies grow was not recognised: ‘The mechanics of growth’, as Lucas would say, seemed to owe little to demography. But times are changing. The overlapping generations model has started a second youth and is now a ‘growth model’. The book by David de la Croix and Philippe Michel comes at the right time as it provides the necessary foundations for this renewal. Indeed, the book gives an exhaustive analysis of the overlapping generations model with simple production. It also provides an up‐to‐date and complete analysis of the issues for which the model happened to be useful. Aimed at graduate and PhD students, it nicely complements its predecessors, in particular, Azariadis’ Intertemporal Macroeconomics and Wallace and McCandless’ Introduction to Dynamic Macroeconomics.

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