Plot a way through booms and busts

This is an excellent addition to the macro text market. It is pitched at advanced third-year undergraduate courses, which are not especially well served. It could also usefully act as an introduction on taught postgraduate programmes.

The treatment of the topics is clear, not technically demanding (drawing on the calculus and analysis of difference equations that will be familiar to all third-years) and always involves engagement with the empirical evidence. The latter is drawn widely from Europe and the US, and the rest of the world when growth is discussed. There are also exercises at the end of each chapter and the usual web-based array of aids and supplements.

The coverage of topics is good and will suit most courses of this sort. Of course everyone will have the odd gripe. One of mine relates to the way that price stickiness is often acknowledged in the text but rarely plays a role in the formal models. Another is that although the authors’ decision to work extensively with a few of the basic macro models makes much sense, I would have liked to see room in an 800-page text for the overlapping generations model.

Against this there are some interesting novelties that will please many audiences. Thus there are discussions of the open economy/globalisation and environmental aspects of growth. IS/LM is dispensed with in favour of a Taylor-like interest rule and the recent revival of interest in macro models with adaptive expectations is reflected in the weight given to this hypothesis in the discussion of business cycles.

Shaun P. Hargreaves Heap is professor of economics, University of East Anglia.