Since the rational expectations revolution in macroeconomics, the subject has evolved in a major way, adopting the principles behind the revolution and building on them in spectacular fashion. In this thoroughly revised and updated second edition, the authors provide a complete and up-to-date textbook designed to guide students through the mathematical and conceptual maze of modern macroeconomics.The updated second edition includes:

• Explanation of the historical development of the subject
• Introduction to traditional macro-classical/adaptive expectations
• Demonstration of how rational expectations are handled in macro models and in finance
• An explanation of the importance of structural, micro-founded models
• Key examples of structural models examined in detail, and with extension to the open economy
• Discussion of policy implications throughout
• Methodology for testing models against macro data behaviour, complete with the latest evidence on these models’ success
• Coverage of key topics, including the supply-side, unemployment, growth and the open economy.

By explaining the basics of each topic, and providing the solid grounding for students to tackle more complex and detailed material, this textbook will be an invaluable resource for both postgraduate and upper level undergraduate students of macroeconomics alike.

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