The Red Book!

History provides ample evidence that red books are important and this one certainly fits the bill. It is one of its kind and in some sense a handbook of a revolution. Yes guys, I am indeed talking about Ljunqvist & Sargent’s (L-S) excursions in recursion!

However, its still a graduate text and hence by definition a badly written text. This fact has always puzzled me. We have fabulous books at the undergraduate level and I agree that they talk a lot. But sometimes stories are important and in subjects like economics, even more so. So what happens when the same author writes a graduate text? Does he not have the right incentives to write an equally accessible text? Or the only thing advanced about the advanced subject matter is the terseness and technique? Probably its the mix of the two factors.

The market is not that big for a graduate text and hence the returns only justify a minimal effort. However, if you read L-S you will find that some chapters are extremely well written. For example the initial chapter on Search theory as well as the one on Asset pricing read very well than other chapters. Coincidently, these chapters come somewhat straight away from Sargent’s earlier book on Dynamic Macroeconomic Theory!

Apart form frequent changes in notation, there are some other glaring examples of poor instructional design. For example, the material in the chapter on economic growth has no relation with the problems at the end of the chapter. What do you think is the reason? They come from completely different sets of authors! So if you are hoping to get some idea about how to solve the problems by reading the chapter, forget it. You might be better off reading the solutions directly.

Well, no point in complaining too much. We don’t have much choice when it comes to a PhD level Macro text based on microfoundations. Hence, even when we know that almost all monopolies suck, we have to patiently wait for a miracle in terms of a better competitor!

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