Recursive methods offer a powerful approach for characterizing and solving complicated problems in dynamic macroeconomics. Recursive Macroeconomic Theory provides both an introduction to recursive methods and advanced material, mixing tools and sample applications. The second edition contains...

Intro -- Contents -- Acknowledgements -- Preface to the second edition -- Part I: The imperialism of recursive methods -- 1. Overview -- Part II: Tools -- 2. Time Series -- 3. Dynamic Programming -- 4. Practical Dynamic Programming -- 5. Linear Quadratic Dynamic Programming -- 6. Search,...

We propose a new welfare criterion that allows us to rank alternative financial market structures in the presence of belief heterogeneity. We analyze economies with complete and incomplete financial markets and/or restricted trading possibilities in the form of borrowing limits or transaction...