Since the rational expectations revolution in macroeconomics, the subject has changed greatly, adopting the principles behind the revolution and building on them in a spectacular way. This text guides students through what has become the conceptual and mathematical maze of modern macroeconomics.

The topics covered include: an introduction to the traditional macro-classical macro/adaptive expectations; how to understand and solve standard macro models with rational expectations; implications of rational expectations for monetary and fiscal policy; the open economy; the new models of representative agents and real business cycles; the political economy of economic policy (the "political business cycle") and independent central banks; the supply-side, unemployment and growth; empirical testing of the rational expectations hypothesis; and the efficient markets hypothesis with empirical applications including bond and exchange markets.

Models of the economy
evaluating government policy
extending and deepening the models - the open economy and micro-foundations
confronting models with facts time series annex - an introduction to linear and non-linear time series.