The Macroeconomics of Self-Fulfilling Prophecies

Abstract

Part 1 Introduction: Equilibrium Theory as an Approach to Macroeconomics A Preview of the Argument An Example Concluding Remarks. Part 2 Linear Difference Equations - Part 1 - Linearizing Nonlinear Models Solving First-Order Linear Models Solving Higher-Order Linear Models Concluding Remarks. Part 3 Linear Difference Equations - Part 2 - Linear Rational Expectations Models Solving Linear Rational Expectations Models Cross-Equation Restrictions and the Lucas Critique Concluding Remarks. Part 4 General Equilibrium Theory under Certainty: The Idea of Equilibrium The Theory of Consumer Choice Excess Demand Functions Equilibria and Their Properties General Equilibrium Theory and Efficient Allocations of Resources Concluding Remarks. Part 5 Infinite Horizon Economies and Representative Agents: The Representative Agent Economy Competitive Equilibrium and the Planner's Problem Using the Representative Agent Model to Explain Time Series Data Concluding Remarks. Part 6 Horizon Economies and Overlapping Generations: The Structure of the Overlapping Generations Economy The Consumer's Problem An Example of a Pareto Inferior Equilibrium Institutions That May Improve Allocations The Set of Equilibria in the Overlapping Generations Model Some Questions about the Model More General Examples of Overlapping Generations Economies Concluding Remarks. Part 7 Infinite Horizon Economies with Nonconvexities: A Growth Model with Increasing Returns Empirical Evidence for Increasing Returns Equilibria in the Increasing Returns Economy Comparing the Theoretical Properties of RA and IR Models Comparing Some Empirical Predictions of RA and IR Models Concluding Remarks. Part 8 General Equilibrium Theory and Uncertainty: Debreu's Formulation of the Problem Arrow's Formulation of the Problem Infinite Horizon Economies with Uncertainty Concluding Remarks. Part 9 Sunspots: Do Sunspots Matter? An Example of a Macroeconomic Model in Which Sunspots Matter Concluding Remarks. Part 10 Macroeconomic Models of Money: Models of Money The Dynamics of a Cash-in-Advance Model Equilibrium under Interest Rate Control Equilibrium under a Fixed Money Growth Rate Rule Concluding Remarks. Part 11 Applied Monetary Theory: The Monetary Facts - What There Is to Explain A Simple Monetary Model - Using Equilibrium Theory to Explain the Facts How Do Equilibria Behave?.