Big Ideas in Macroeconomics - 9780262019736

Macroeconomists have been caricatured either as credulous savants in love with thebeauty of their mathematical models or as free-market fundamentalists who admit no doubt as to themarket's wisdom. In this book, Kartik Athreya draws a truer picture, offering a nontechnicaldescription of prominent ideas and models in macroeconomics, arguing for their value as interpretivetools as well as their policy relevance. Athreya deliberately leaves out the technical machinery,providing students new to modern macroeconomics as well as readers with no formal training ineconomics or mathematics -- including economic writers and policymakers -- with an essential guideto the sometimes abstract ideas that drive macroeconomists' research and practical policyadvice.

Athreya describes the main approach to macroeconomic model construction,the foundational Walrasian general equilibrium framework, and its modern version, theArrow-Debreu-McKenzie (ADM) model. He then explains the reasons for the relevance of this model forinterpreting real-world outcomes, and lays out the so-called Fundamental Theorems of WelfareEconomics. In the heart of the book, Athreya shows how the Walrasian approach shapes and unifiesmuch of modern macroeconomics. He details models central to ongoing macroeconomic analyses: theneoclassical and stochastic growth models, the standard incomplete-markets model, theoverlapping-generations model, and the standard search model. Athreya's accessible primer traces thelinks between the views and policy advice of modern macroeconomists and their shared theoreticalapproach.