Stochastic Dynamic Macroeconomics Theory and Empirical Evidence

"This book is an important addition to the macroeconomics literature. The authors first argue that the DGE paradigm fails to resolve some important issues in macroeconomics. They then develop a framework that preserves the view of intertemporal behaviour of economic agents but that doesn't presume the clearing of all markets, thereby integrating the idea of non-clearing markets into an intertemporal framework. The framework of the Keynesian tradition of non-clearing markets-resulting from nominal rigidities-is skilfully applied to show that non-clearing labour markets can also result from intertemporal behaviour. Moreover, in the book demand shocks-in contrast to supply shocks as the DGE assumes-again find an important role for macroeconomic fluctuations."

Gang Gong is Associate Professor of Economics and Management at Tsinghua University in Beijing, China, and co-author of The Forces of Economic Growth (2005).
Willi Semmler is Professor of Economics at New School University, at the Center for Empirical Macroeconomics at Bielefeld University, and Research Fellow at the Bernard Schwartz Center for Economic Policy Analysis. He is the author of Asset Prices, Booms, and Recessions (2003), co-author of The Forces of Economic Growth (2005), Dynamic Macroeconomics (1997), Disequilibrium, Growth, and Labor Market Dynamics (2001), Monetary and Fiscal Policy in the Euro-area (2005); editor of Monetary Policy and Unemployment: US, Euro-Area and Japan, (2005) and co-editor of the series Dynamic Modelling and Econometrics in Economics and Finance.