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ABOUT THE AUTHOR
Introduction 1
Chapter 1 THE SOLOW GROWTH MODEL 6
Chapter 2 INFINITE-HORIZON AND OVERLAPPING-
GENERATIONS MODELS 50
Chapter 3 ENDOGENOUS GROWTH 99
Chapter 4 CROSS-COUNTRY INCOME
DIFFERENCES 149
Chapter 5 REAL-BUSINESS-CYCLE THEORY 188
Chapter 6 NOMINAL RIGIDITY 238
Chapter 7 DYNAMIC STOCHASTIC GENERAL-
EQUILIBRIUM MODELS OF
FLUCTUATIONS 309
Chapter 8 CONSUMPTION 368
Chapter 9 INVESTMENT 420
Chapter 10 FINANCIAL MARKETS AND FINANCIAL
CRISES 458
Chapter 11 UNEMPLOYMENT 520
Chapter 12 MONETARY POLICY 578
Chapter 13 BUDGET DEFICITS AND FISCAL POLICY 660
References 715
Indexes 752
ix
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CONTENTS
xi
xii CONTENTS
12.7 The Zero Lower Bound on the Nominal Interest Rate 615
12.8 The Dynamic Inconsistency of Low-Inflation
Monetary Policy 630
12.9 Empirical Applications 637
12.10 Seignorage and Inflation 642
Problems 652
References 715
Author Index 752
Subject Index 761
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EMPIRICAL APPLICATIONS
xvi
PREFACE TO THE FIFTH EDITION
xvii
xviii PREFACE
on the forward guidance puzzle, which starkly shows some of the limita-
tions of the canonical new Keynesian model. I have also overhauled much
of the presentation of empirical work on consumption in Chapter 8, pruned
unnecessary or outdated material, and made revisions throughout to try to
further improve the exposition. And I have continued to devote a great
deal of attention to the end-of-chapter problems, which I view as invalu-
able for strengthening the reader’s understanding of the material, concisely
introducing extensions of the core material, and challenging the reader to
develop important skills. Some of my favorites among the new problems are
1.10, 2.13, 8.16, 8.17, 9.4, and 10.10.
For additional reference and general information, please refer to the
book’s website at www.mhhe.com/romer5e. Also available on the web-
site, under the password-protected Instructor Edition, is the Solutions Man-
ual. Print versions of the manual are available by request only if interested,
please contact your McGraw-Hill Education representative.
This book owes a great deal to many people. The book is an outgrowth
of courses I have taught at Princeton University, the Massachusetts Insti-
tute of Technology, Stanford University, and especially the University of
California, Berkeley. I want to thank the many students in these courses for
their feedback, their patience, and their encouragement.
Four people have provided detailed, thoughtful, and constructive com-
ments on almost every aspect of the book over multiple editions: Laurence
Ball, A. Andrew John, N. Gregory Mankiw, and Christina Romer. Each has
significantly improved the book, and I am deeply grateful to them for their
efforts. In addition, I am indebted to Laurence Ball and Kinda Hachem for
their extremely valuable guidance and feedback concerning the material
that is new to this edition.
Many other people have made valuable comments and suggestions con-
cerning some or all of the book. I would particularly like to thank James
Butkiewicz, Robert Chirinko, Matthew Cushing, Charles Engel, Mark Gertler,
Robert Gordon, Mary Gregory, Tahereh Alavi Hojjat, A. Stephen Holland,
Hiroo Iwanari, Frederick Joutz, Jinill Kim, Pok-sang Lam, Gregory Linden,
Maurice Obtsfeld, Jeffrey Parker, Stephen Perez, Kerk Phillips, Carlos Ramirez,
Robert Rasche, Joseph Santos, Peter Skott, Peter Temin, Henry Thompson,
Patrick Toche, Matias Vernengo, and Steven Yamarik. I am also grateful
to the many readers who have written to point out specific typos, incon-
sistencies, and ambiguities. Jeffrey Rohaly once again prepared the superb
Solutions Manual. Benjamin Scuderi updated the tables and figures, provided
valuable assistance and feedback concerning many aspects of the new mate-
rial, and helped with the proofreading. Finally, the editorial and production
staff at McGraw-Hill did an excellent job of turning the manuscript into a
finished product. I thank all these people for their help.
INTRODUCTION
1
2 INTRODUCTION
the economy is fixed (the Ramsey model) and one where there is turnover
(the Diamond model).
Chapter 3 presents the new growth theory. It begins with models where
technological progress arises from the allocation of resources to the devel-
opment of new ideas, but where the division of resources between the
production of ideas and the production of conventional goods is taken as
given. It then considers the determinants of that division.
Chapter 4 focuses specifically on the sources of the enormous differences
in average incomes across countries. This material, which is heavily empir-
ical, emphasizes two issues. The first is the contribution of variations in
the accumulation of physical and human capital and in output for given
quantities of capital to cross-country income differences. The other is the
determinants of those variations.
Chapters 5 through 7 are devoted to short-run fluctuations the year-to-
year and quarter-to-quarter ups and downs of employment, unemployment,
and output. Chapter 5 investigates models of fluctuations where there are
no imperfections, externalities, or missing markets and where the economy
is subject only to real disturbances. This presentation of real-business-cycle
theory considers both a baseline model whose mechanics are fairly transpar-
ent and a more sophisticated model that incorporates additional important
features of fluctuations.
Chapters 6 and 7 then turn to Keynesian models of fluctuations. These
models are based on sluggish adjustment of nominal prices and wages,
and emphasize monetary as well as real disturbances. Chapter 6 focuses
on basic features of price stickiness. It investigates baseline models where
price stickiness is exogenous and the microeconomic foundations of price
stickiness in static settings. Chapter 7 turns to dynamics. It first exam-
ines the implications of alternative assumptions about price adjustment in
dynamic settings. It then turns to dynamic stochastic general-equilibrium
models of fluctuations with price stickiness that is, fully specified general-
equilibrium models of fluctuations that incorporate incomplete nominal
price adjustment.
The analysis in the first seven chapters suggests that the behavior of
consumption and investment is central to both growth and fluctuations.
Chapters 8 and 9 therefore examine the determinants of consumption and
investment in more detail. In each case, the analysis begins with a baseline
model and then considers alternative views. For consumption, the baseline
is the permanent-income hypothesis; for investment, it is q theory.
The analysis of consumption and investment leads naturally to an exam-
ination of financial markets, which are the subject of Chapter 10. Financial
markets are where households’ supply of saving and firms’ demand for in-
vestment meet to determine the division of the economy’s output between
consumption and investment and the allocation of investment among alter-
native projects. More importantly, imperfections in financial markets can
both amplify the effects of shocks elsewhere in the economy and be an
Exploring the Variety of Random
Documents with Different Content
rook van het kampvuur. Tien exemplaren, in een flesch gedaan, gaven
zoveel licht, dat ik er met gemak bij lezen kon.
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M.
Manja. N.E. naam voor (Mangifera indica L.), een grooten uit O. I.
afkomstigen boom, wiens vruchten een oranjegeel vruchtvleesch en
één groote pit hebben, door een vezelige buitenlaag omgeven. Deze
vezels dringen in het vruchtvleesch door. Er zijn verschillende
variëteiten, wier waarde voor de cultuur afhangt van de grootte van de
pit, van de hoeveelheid vezels in het vleesch en van den geur. De
manja is een der weinige veredelde tropische vruchten.
Moetitté. Open korf of zak, gevlochten uit de bladeren van den Pina-
palm of van andere palmsoorten, en waarin de I. vruchten enz. dragen.
Aan een katoenen band of baststrook van den Oeman barklak (Zie:
Winnamoroe), die om het voorhoofd loopt, dragen zij de korf op den
rug. De gesloten korven der N. heeten eveneens moetitté.
Mopé. Zie: Pruim.
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N.
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O.
Otolin. Naam van een vogel, die in de litteratuur niet kon worden
opgespoord.
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P.
Paiwarri. In Engelsch G. duidt men met dezen naam den drank aan,
die bereid wordt uit dik, eenigszins verbrand Cassave-brood, dat
gekauwd en in een korjaal gespuwd wordt. Het mout komt er bij in den
vorm van een enkele dagen te voren gereedgemaakte stroop van een
weinig gekookt Cassave-sap en eenige verbrande koeken. De korjaal
wordt daarna met palmbladeren bedekt om de massa eenige dagen te
laten gisten. Tegenwoordig is deze onsmakelijke bereiding verlaten.
De A. noemen dezen drank, die eenigszins zuur smaakt, Tapana. De I.
spreken van Tapana- of Paiwarri-feesten.
Papaja. (Carica papaya L.). Boom met weeken, kalen stam en dichte
kroon van handvormig ingesneden bladeren. De vruchten zijn licht
verteerbaar, de bladeren worden gebruikt om vleesch malsch te
maken.
Pasrie, ook wel Pasirimbo genoemd, is een in der haast uit één
palmblad gevlochten korf.
Patatten. De wortelknol van een kruidachtige, kleine plant (Ipomoea
batatas L.) wordt gekookt of geroosterd gegeten, maar ook als veevoer
gebruikt. Zoowel I. als N. planten dit gewas op hunne kostgronden
aan. Switi patata (zoete patatten) is de N.E. naam.
Peperpot (kasripopot), bereidt men uit pap van de bittere Cassave, die
men tot een bittere brij laat koken. In den pot, die volgens I.-geloof
nooit mag worden schoongemaakt (zie No. 26), wordt het voorradige
vleesch en de visch met veel Spaanschen peper dooreengeroerd, om
een der voornaamste gerechten van den I. te bereiden. Altijd staat bij
hen een peperpot klaar. De peperpot wordt steeds bijgevuld.
[Inhoud]
R.
S.
T.
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V.
Vogelspin. Zeer groote spinnen, zoo genoemd, omdat zij ook wel
eens kleine vogels, als Kolibries, overvallen. Men onderscheidt nog
twee soorten Mygale blondii, en M. avicularia. De eerste is de grootst
bekende spinnensoort. Het sterk behaarde dier leeft in den grond,
waarin het gangen bewoont (soms 60 cM. lang), aan wier ingang het
tegen den avond op de loer ligt. De tweede soort is kleiner en maakt
haar zakvormig spinsel overal, op boomen, tusschen de bladeren der
ananas, in huizen.
[Inhoud]
W.
[Inhoud]
Y.
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1 Bij de samenstelling van dit register is, behalve van de geschriften, in het
litteratuur-overzicht genoemd, een ruim gebruik gemaakt van de Encyclopedie
van Ned. West-Indië. ↑
2 Een gelijksoortig geloof komt ook bij andere primitieve stammen voor (o.a. bij de
oorspronkelijke Koeboes van Zuid-Sumatra). ↑