Recursive Macroeconomic Theory

Recursive methods offer a powerful approach in dynamic macroeconomics. This book contains both an introduction to recursive tools, including standard applications such as asset pricing, and advanced material, including analyses of reputational mechanisms and contract design. The tools are presented with enough technical sophistication to get the reader started working on practical problems. When numerical simulations are called for, the book provides suggestions for how to proceed, as well as references for further reading. The applications cover many substantive issues in macroeconomics, such as equilibrium asset prices, market incompleteness, wealth distribution, fiscal-monetary theories of inflation, government debt, optimal labor and capital taxation, time consistency and credible government policies, optimal social insurance, economic growth, and labor market dynamics. 1. Time Series -- 2. Dynamic Programming -- 3. Practical Dynamic Programming -- 4. Linear Quadratic Dynamic Programming -- 5. Search, Matching, And Unemployment -- 6. Recursive (partial) Equilibrium -- 7. Competitive Equilibrium With Complete Markets -- 8. Overlapping Generations Models -- 9. Ricardian Equivalence -- 10. Asset Pricing -- 11. Economic Growth -- 12. Optimal Taxation With Commitment -- 13. Self-insurance -- 14. Incomplete Markets Models -- 15. Optimal Social Insurance -- 16. Credible Government Policies -- 17. Fiscal-monetary Theories Of Inflation -- 18. Credit And Currency -- 19. Equilibrium Search And Matching -- 20. Appendix On Functional Analysis -- 21. Appendix On Control And Filtering -- Matlab Programs Index. Lars Ljungqvist, Thomas J. Sargent. Includes Bibliographical References And Index. An introduction to recursive methodology in dynamic macroeconomics, designed to get the reader working on practical problems