Finn Kydland was awarded the Nobel Prize in Economics in 2004 with Ed Prescott for their contributions to dynamic macroeconomics. In Kydland's Nobel lecture, he mentioned a truth that every professor of undergraduate macroeconomics has struggled with. "In the past 20 years, the gap between research and textbooks has grown wider and wider." The economic models outlined in undergraduate macroeconomic textbooks have almost no resemblance to the models used in current research, and the difference is the treatment of decisions across time--dynamics.
In the Summer 2009 issue of From the Lab, the newsletter of the Laboratory for Agrregate Economics and Finance (LAEF) at UC Santa Barbara, Kydland recommended a forthcoming macroeconomics textbook by Morris Davis, Assistant Professor in the University of Wisconsin-Madison Business School, entitled Macroeconomics for MBAs and Masters of Finance. In the newsletter Kydland said the following:
That sounds like a great macroeconomics textbook to me. I look forward to getting a copy of it, and my classes in the future will likely benefit from it. In addition, I have seen Professor Davis in concert twice. He plays bass guitar for one of the only economist rock and roll bands in the world--The Contractions.
Almost all interesting macroeconomic phenomena are dynamic in nature. Accordingly, the economic models we use in research to address important macroeconomic questions and issues contain explicit descriptions of the decision problems faced by forward-looking people. But it's not straightforward to do dynamics on paper, and so most textbooks largely shy away from it. In the process, students are done a disservice. Morris Davis changes all of that. He has succeeded in introducing dynamics in a manageable way. At the same time, the book is fun to read. What's also interesting is his ability, from time to time, to connect with issues commonly discussed only in finance.
That sounds like a great macroeconomics textbook to me. I look forward to getting a copy of it, and my classes in the future will likely benefit from it. In addition, I have seen Professor Davis in concert twice. He plays bass guitar for one of the only economist rock and roll bands in the world--The Contractions.
