"This is an ambitious book. We need to develop new approaches to business cycles and unemployment. Roger Farmer's attempt is refreshing, insightful and bold."--Daron Acemoglu, Charles P. Kindleberger Professor of Applied Economics, MIT and Co-Editor of Econometrica
"This book is modestly represented by its author as an extension to Keynesian economics. But I am more inclined to represent it as a new tradition, 'Farmerian economics.' While both are intended to provide justification for active countercyclical policy in the face of market failure, the microfoundations for Farmerian economics are much stronger than those of John Maynard Keynes. Farmerian economics is as distinct from Keynesian and New Keynesian economics as Lucasian economics is from Classical and New Classical Economics."--William A. Barnett, Oswald Distinguished Professor of Macroeconomics, University of Kansas, and Editor, Macroeconomic Dynamics
"In this important book, Roger Farmer challenges the commonly accepted structure of modern DSGE models. Since these models are still, at their core, neoclassical constructs they miss much of the intuition of Keynes' original contribution. Farmer builds microfounded dynamic equilibrium models that can generate persistent inefficient equilibria with high levels of unemployment. He confronts these models with data, and uses them to argue for vigorous government policies to avoid those situations. In this way, Farmer not only greatly enriches our understanding of dynamic macroeconomics, but shows how its tools can be applied to many different environments with a surprising level of flexibility and power. An insightful work that all macroeconomists interested in business cycles should read."--Jesus Fernandez-Villaverde, Associate Professor of Economics, University of Pennsylvania
"What did Keynes really mean? How much of Keynesian intuition can be formulated using the language of modern macroeconomics? If you want to find out, read this creative and fascinating book. It uses tools from search theory and self-fulfilling equilibria to breathe new life into old debates. Keynes is dead. Long live Roger Farmer!"--Harald Uhlig, Professor and Chair, Department of Economics, The University of Chicago and Co-Editor of Econometrica
About the Author
Roger E. A. Farmer is Professor and Department Chair of the UCLA Department of Economics. He is a Research Associate of the National Bureau of Economic Research and the Centre for Economic Policy Research, and co-editor of the International Journal of Economic Theory. He is a member of the Financial Times Economists' Forum, a specialist on macroeconomic theory, and the author of six books and numerous scholarly articles. His book How the Economy Works, a companion to this book, is available from Oxford University Press. Written in clear, accessible language, it makes an argument that no one should ignore. How the Economy Works is suitable for general readers with an interest in business and the economy; students at all levels in undergraduate and graduate economics courses; and academics and practicing economists in business and policy institutions.