Recursive Models of Dynamic Linear Economies
Lars Peter Hansen，Thomas J. Sargent
This book is mostly about macroeconomics in the sense of Tobin and Rosen, the models being cast in terms of a representative consumer. Such models are useful but restrictive. More general structures with heterogeneous consumers do not possess a representative household of the type that this book extensively uses to facilitate analysis of aggregate quantities and prices. This book demonstrates the analytical benefits acquired when an aggregate analysis is possible, but characterizes how restrictive are the assumptions under which there exists the representative household that justifies a purely aggregative analysis.