28 books like Macroeconomic Theory

This choice is obvious and tough.

The book is notoriously difficult. However, it ranks with Darwin’s Origins of the Species, and Einstein’s General Theory of Relativity as among the most important and revolutionary books ever.

It’s no exaggeration to say that Keynes changed everything in the same way that Darwin and Einstein had. It will change the way you see the world if you make the substantial effort. Keynes argues that it is the organization of our economy around money that causes unemployment—not high wages or lazy workers.

Here’s my one sentence summary: firms only hire the number of workers they need to produce the output they expect to sell at a profit. If they cannot make money from hiring you, you are unemployed.

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 read this wonderful book in the early 2000s when I had returned to Istanbul, Türkiye back from a professional position in the UK.

I was captivated by its description of the flora and fauna of our geography. I recall reading how the beloved chestnut trees of our region had made their way there from China. Braudel is an economic historian who is known to have placed physical and biological nature in the foreground of historical analysis. Thus, according to Braudel, nature is not merely space to be conquered or to be shaped by human desires.

Indeed, the organization of economic life in the Mediterranean was probably shaped by the diversity and difficulty of its geography as much as shaping it, as we argued in our article on Mediterranean business cycles published with Fabio Canova in Open Economies Review in 2013.   

Living in Istanbul over a long period since 1995 made me want to know its history better.

This book is one of best written and most influential books on the topic describing, as it does, not only the political and military history of the Ottoman Empire but also its economic and social fabric, its ability to innovate in a variety of fields and the reasons behind its rule over six centuries.

My interest in the topic eventually led to an influential publication with the economic historian Şevket Pamuk and our younger colleague Alpay Filiztekin in the European Review of Economic History in 2008 on the sources of economic growth for the region encompassing modern Türkiye between 1880-2005.      

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.

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.

The book brings together a series of contributions to monetary macroeconomics as well as Bernard Schmitt’s last critique to relative price determination.

I recommend it to the reader interested in monetary theory because it gives an overview of the most challenging topics in this field, from money to financial crisis, passing through profit formation, inflation, and unemployment.

International issues are also considered, while a groundbreaking analysis of sovereign debt and interest payments is presented in what was to become Schmitt’s last contribution in English to international macroeconomics.

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.

I recommend this book because it deals with the main problems faced by capitalist economies, inflation, and unemployment, in a new and original way, and provides the theoretical foundations for quantum macroeconomic analysis.

Orthodox economics has failed to provide a consistent insight into the pathologies blighting our economies, and both the academic and the economic worlds badly need an alternative approach to convincingly diagnose these pathologies, where they come from, and how they can eventually be disposed of.

Schmitt’s volume provides a revolutionary explanation of the cause of today’s economic disorder as well as an innovative solution enabling for the passage from disorder to order.

Grappling with the meaning of money and unraveling its impact on prices or on the creation of wealth is enduringly controversial.

Fascination with money - to eyes or pockets - is universal. Fisher understood this!

He defined money simply as what is acceptable in exchange for goods: bills, coins, cheques - legal tender - or other forms of debt.

Since inflation, for Fisher, is a monetary phenomenon, and as in classical physics, where one matter is equalised to another, in his economics, money-on-the-move is always balancing products-for-a-price; in the long run, too much money or too little does not affect wealth creation but only the level of price.

Fisher is a ‘must read’ because this, his ultimate conclusion, deprived of his many subtleties, is the basis of present macroeconomics.