Modern macroeconomics, as practiced in academic research and central banks, rests on microfoundations that explain aggregate outcomes through the optimizing behavior of households and firms. Yet students often face a sharp divide between intuitive demandside models and the full technical apparatus of infinitehorizon DSGE frameworks. This book closes this gap.

The book is built around a deliberately compact and transparent laboratory: twoperiod dynamic generalequilibrium models with closedform solutions. By keeping every assumption, constraint, shadow price, and firstorder condition explicitly on the page, it allows readers to derive the transmission mechanisms of monetary and fiscal policy themselves rather than treating them as black boxes. Heavy dynamic programming and numerical methods are avoided so that the core economic logic remains fully visible throughout.

The exposition develops systematically from microeconomic foundationsconsumption and saving, labor supply, investment, and general equilibriumto a sequence of cumulative policy applications. A flexibleprice RBC benchmark establishes monetary neutrality, followed by cashinadvance and New Keynesian environments that introduce nominal rigidities, the zero lower bound, and monetaryfiscal interactions. Fiscal policy, heterogeneity through a TwoAgent New Keynesian (TANK) model, and international macroeconomics in openeconomy and twocountry settings are all treated analytically within the same unified framework.

The final part bridges the twoperiod approach to infinitehorizon DSGE models, deriving the canonical threeequation New Keynesian model in full and providing readytorun Dynare files for immediate simulation. Designed as a selfcontained onesemester textbook, the volume is modular, exercisebased, and analytically rigorous, equipping readers with a clear and reliable pathway into contemporary macroeconomic research and policy analysis.

Offers a clear, analytical path from intermediate macroeconomics to the models that shape contemporary policy debates Bridges theory to policy with clear, closed-form macro models for advanced undergraduates Equips readers to confidently transition from two-period models to modern DSGE frameworks

Autorentext

Mauricio G. Villena is Dean and Full Professor of Economics & Public Policy at the Faculty of Administration and Economics, Universidad Diego Portales (UDP), Chile. He previously held senior positions at Chile's Budget Office (Ministry of Finance), serving as Deputy Director (20182020) and Chief Economist (20102013). Villena earned his Ph.D. in Economics from the University of Cambridge. His research spans applied microeconomics, macroeconomics, and public policy.

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Gabriel P. Pino** is Associate Professor of Economics and Director of the Doctoral Program in Business Administration at the Faculty of Administration and Economics, Universidad Diego Portales (UDP), Chile. He holds a Ph.D. in Economics from Southern Illinois University (USA). His research focuses on macroeconomics, monetary economics, and applied econometrics.

Inhalt

Chapter 01. Modern Macroeconomics: An Intellectual History.- Chapter 02. Dynamic ConsumptionSaving Model.- Chapter 03. Macroeconomic Theories of Consumption.- Chapter 04. Static ConsumptionLabor Model.- Chapter 05. Dynamic ConsumptionSaving Model with Inflation.- Chapter 06. Dynamic Model of Consumption and Labor.- Chapter 07. Firms and Investment.- Chapter 08. General Equilibrium Analysis.- Chapter 09. Real Business Cycle (RBC) Model.- Chapter 10. Real Business Cycle with Flexible Prices: Monetary Policy Emerges.- Chapter 11. New Keynesian Model: When Monetary Policy Gains Traction.- Chapter 12. New Keynesian Model: Monetary & Fiscal Policy.- Chapter 13. New Keynesian Model with Two Agent Types.- Chapter 14. Concluding Remarks.