Macroeconomic Fluctuations and Policies

Macroeconomic Fluctuations and Policies

By Edouard Challe

Translated by Susan Emanuel

The basic tools for analyzing macroeconomic fluctuations and policies, applied to concrete issues and presented within an integrated New Keynesian framework.
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The basic tools for analyzing macroeconomic fluctuations and policies, applied to concrete issues and presented within an integrated New Keynesian framework.

This textbook presents the basic tools for analyzing macroeconomic fluctuations and policies and applies them to contemporary issues. It employs a unified New Keynesian framework for understanding business cycles, major crises, and macroeconomic policies, introducing students to the approach most often used in academic macroeconomic analysis and by central banks and international institutions. The book addresses such topics as how recessions and crises spread; what instruments central banks and governments have to stimulate activity when private demand is weak; and what “unconventional” macroeconomic policies might work when conventional monetary policy loses its effectiveness (as has happened in many countries in the aftermath of the Great Recession.).

The text introduces the foundations of modern business cycle theory through the notions of aggregate demand and aggregate supply, and then applies the theory to the study of regular business-cycle fluctuations in output, inflation, and employment. It considers conventional monetary and fiscal policies aimed at stabilizing the business cycle, and examines unconventional macroeconomic policies, including forward guidance and quantitative easing, in situations of “liquidity trap”deep crises in which conventional policies are either ineffective or have very different effects than in normal time.

This book is the first to use the New Keynesian framework at the advanced undergraduate level, connecting undergraduate learning not only with the more advanced tools taught at the graduate level but also with the large body of policy-oriented research in academic journals. End-of-chapter problems help students master the materials presented.

Instructor Resources

Downloadable instructor resources available for this title: solutions, slides, a file of figures in the book.


$120.00 X ISBN: 9780262039550 360 pp. | 7 in x 9 in 67 figures


Susan Emanuel.


  • An impressive bridge between undergraduate macro and graduate macro, and a splendid treatment of recent developments in fiscal and monetary policy.

    Olivier Blanchard

    C. Fred Bergsten Senior Fellow, Peterson Institute for International Economics; Robert M. Solow Professor Emeritus, MIT

  • Edouard Challe's textbook provides a brilliant and accessible treatment of modern macroeconomics that is firmly grounded in current theory and practice. No longer will there be cries of 'Huh!?' when students find out that the macroeconomics they need is completely different from what they learned in their undergraduate courses.

    Martin Ellison

    Nuffield College, University of Oxford

  • The main challenge facing macroeconomics is to make sense of economic fluctuations  through the use of simple, highly aggregative models that capture the main forces and mechanisms behind those fluctuations and which can be used as the basis for the design of appropriate policies.  Edouard Challe's textbook provides an excellent introduction to macroeconomists' efforts to meet that challenge. It should prove an excellent reference for undergraduate macro courses, but also useful reading for academic and professional economists working in other areas and seeking to brush up their knowledge of macroeconomics.

    Jordi Gali

    Senior Researcher, Centre de Recerca en Economia Internacional; Professor, Universitat Pompeu Fabra; Research Professor, Barcelona Graduate School of Economics