Macroeconomics - Which Way Now? Old versus New Styles
AbstractThis paper contrasts the new style of doing macroeconomics, where the emphasis is on propositions rigorously derived from neoclassical micro foundations, with the old style associated with the work of Keynes in particular. The paper argues that the latter type of model, which is based on more realistic albeit informal behavioural micro foundations, is better suited to the concerns of policy makers. However, emphasis on the new style has led to an abandonment of research on adapting the old paradigms to new concerns, with a consequent loss for practical policy making especially with respect to macro stabilization. A perspective on how the new style can and cannot be helpful is provided.
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Bibliographic InfoArticle provided by Nordic Journal of Political Economy in its journal Nordic Journal of Political Economy.
Volume (Year): 30 (2004)
Issue (Month): ()
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macroeconomic policy; neoclassical micro foundations; behavioural psychology;
Find related papers by JEL classification:
- B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
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