The Relevance of Haavelmo's Macroeconomic Theorizing for Contemporary Macro Policy Making
AbstractThis paper reviews Haavelmo’s basic macroeconomic model, and argues that even though it was minted in the 1950s it remains highly relevant today. Key features that contribute to its relevance are that it integrates balance sheet transactions with flow activities such as production, consumption, and investment; allows shocks emanating from either the financial or real sides to impact on the other; and provides a unified theory of how underemployment and full employment can be generated. These features have not been adequately dealt with in the current dynamic stochastic general equilibrium (DSGE) paradigm.
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Bibliographic InfoArticle provided by Nordic Journal of Political Economy in its journal Nordic Journal of Political Economy.
Volume (Year): 37 (2012)
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Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
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