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What's New- There are now separate chapters on endogenous growth, Chapters 3 and 4. Chapter 3 covers models of endogenous growth, updated to include Paul Romer’s model of endogenous technological process. Chapter 4 focuses on the enormous income differences across countries, including more extensive consideration of empirical work on the underlying determinants of those differences.
- Chapters 6 and 7 on short-run fluctuations when prices are not fully flexible have been completely redone. The material is now grounded in microeconomic foundations from the outset. It proceeds from simple models with fixed prices to the canonical three-equation new Keynesian model to modern dynamic stochastic general-equilibrium models of fluctuations.
- In Chapter 10, the presentation of search-and-matching models of the labor market has been greatly expanded while the material on contracting models has been substantially compressed.
- Chapter 11 has been entirely reorganized to closely tie to the earlier analyses of short-run fluctuations and to include careful treatment of optimal policy in forward-looking models.
- The financial and macroeconomic crisis that began in 2008 is brought in where relevant, and an epilogue discusses some of the main issues that the crisis raises for the future of macroeconomics.
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2012 McGraw-Hill Higher Education