The most recommended macroeconomics books

This eBook, developed by faculty members from top institutions, is available for free from the developers’ website, offers several online resources, it's frequently updated, translated to several languages, and has been widely adopted in several countries.

The book includes both the usual topics for courses on introduction to microeconomics and introduction to macroeconomics, using a similar writing style as other introductory textbooks (assumes no mathematical background), thus being accessible to a wide range of students.

Unlike similar books, however, it structures topics differently: instead of presenting chapters according to the main tool or concept being introduced, chapters are presented according to real-world problems.

While this can help motivate each chapter, it may require some adapting from the instructor’s teaching style.

This book is more scientific, but very interesting if you like to dig more into the depth of money illusion backed by its experimental investigation.

The old concept of money illusion is updated and transformed into its modern version, which is built on the principle of strategic complementarity. In this case, even a negligible individual money illusion suffered by only few agents might multiply effects of money illusion at the aggregate level due to a well-known mainstream concept called coordination failure. Modern money illusion might be responsible for substantial effects at the aggregate level.

For me, this book is very appealing, since the non-neutrality of money in the short run is explained in an alternative way, but it does not deny standard rational expectations theory.

This was an exciting reading for me. I find a great connection with Akerlof and Shiller’s book Animal Spirits.

This book admits, that people might have some cognitive limitations and use simple forecasting rules in order to make decisions with resulting implications at the aggregate level. As a result, there is great potential for the emerging, yet undiscovered discipline of behavioral macroeconomics.

Personally, for me, revolutionary element is the combination of bounded rationality and willingness to learn from past mistakes and consequent switch to better rules. This book introduces special behavioral macroeconomic model based on the dynamics of endogenous animal spirits, in which case waves of optimism and pessimism are responsible for the business cycle itself.

I find especially interesting the part devoted to the discussion of how central banks should approach inflation targeting in behavioral models with animal spirits.

This is a collected volume that Kevin Hoover of Duke University put together to provide a philosophical and methodological viewpoint on the empirical and quantitative research that was emerging from the Universities of Chicago, Minnesota, Carnegie-Mellon, Rochester in the 1970s and 1980s.

My own article, “Time-to-Build and Aggregate Fluctuations: Some New Evidence”, originally published in International Economic Review in 1989, was re-printed in this volume. Why was this article re-printed in this volume? It showed that a tightly-specified representative consumer model of aggregate fluctuations, regardless of the theoretical enhancements and econometric approach, could not explain series like aggregate output, consumption and investment jointly with aggregate hours.

While Kevin Hoover continued his methodological research on causality, micro-foundations of macroeconomics and the like, this research led me to delve into micro data models of consumption and labor supply with my co-author Robert Miller from CMU to model individual choices under aggregate shocks.     

I enjoyed reading this book as it provided a deep, and engaging overview of economic theory.

The authors manage to strike a balance between providing a high-level theoretical discussion and making the content accessible to a wider audience. One thing that stood out to me was the authors' emphasis on the diversity of the various schools of economic thought.

In their work, they avoid the common pitfall of suggesting that the history of Economics has “ended”, and instead observe the evolution of economic theory over time. Also, I appreciate the fact that they do not believe that theories in fashion today necessarily provide an adequate explanation for the functioning of the economy.

Overall, I recommend this book to anyone interested in gaining insight into Economics’ controversial development.

When I first met him at the University of Fribourg, Switzerland in 1969, I was immediately fascinated by Bernard Schmitt’s passion for scientific research and by his novel approach to monetary macroeconomics.

Three years later I started working with him as a teaching and research assistant and went on working as his closest collaborator until his death in 2014. The other two co-editors of this book also had the privilege to work closely with him.

Conceived as an homage to Schmitt’s legacy, this book is a collection of contributions explaining the historical origin, the analytical content, and the current relevance of Schmitt’s quantum macroeconomic analysis.

Naughton is the grandfather of China economy books, having written prolifically and with great authority on it for what seems like an eternity. This second edition updates his original 2006 work and should be considered a sort of bible, certainly an essential reference, on how China emerged from poverty under Mao to become what it is today. There are no economic or economic policy or structure stones unturned in this tome.

If you are more minded to read an authoritative narrative rather than a sort of handbook, I recommend a much shorter, readable book by the same author, published last year called The Rise of China’s Industrial Policy. It’s also very topical and pertinent to contemporary China discussion.

I like this book especially due to its ability to illustrate money illusion in a very unconventional context.

Normally, money illusion means that people take nominal variables as proxy for real variables, which leads to suboptimal choice having real effects on the economy and affecting business cycle.

However, to my great surprise this book claims that even economic experts might suffer from some kind of money illusion, because they tend to misinterpret what is happening in the monetary system. This offers a very interesting explanation of recession and suggests that economists have not targeted adequate variables.

Unconventional suggestion to practice nominal GDP (gross domestic product) targeting instead of targeting the money supply is “outcome” of unique author´s vision called market monetarism. Inattention of policymakers to development of nominal GDP is blamed to be the direct cause of recession. 

I am an academic economist, but even more interested in intellectual debates. I discovered this book when I was a PhD student, and it has remained a favorite of mine.

In the 1970s, macroeconomics (not my field) underwent a revolution. The old guard was “Keynesian,” the new Turks were “new classical”. This book is a series of conversations from the early 1980s with the protagonists of this epic period, many future Nobel laureates.

The interviewer, Arjo Klamer, was interested in the rhetoric and culture of economics, and he constructed the interviews in a way that nicely brought out these elements. The interlocutors are brilliant, acerbic, and funny. If you think economics is dry or boring, you won’t think so after seeing how passionate these people are.

This is a funny exploration of the popular TV series, showing how each episode is packed with microeconomics topics, including comparative advantage, demand and supply, costs, market imperfections, and government interventions.

It even includes several references to macroeconomics, including growth, labor markets, and inequality.

Readers can also consider other titles in this series, based on their taste of popular culture, including Superheroes and Economics, Seinfeld and Economics, and The Beatles and Economics, among others.