The Relevance of Haavelmo’s Macroeconomic Theorizing for Contemporary Policy Making
AbstractThe recent great financial crisis and the ensuing deep recessions have placed in sharp relief the fundamental issue of how financial factors, including financial instability, interact with the real economy. In order to understand the nature of these interactions and formulate policies that would help contain adverse outcomes it is essential to have an adequate conceptual framework. Unfortunately, the standard DSGE approach is deficient in this regard. This paper contends that Haavelmo’s macroeconomic theorizing provides a better starting point for forging the required integration between the financial and real sectors. The paper extends the basic Haavelmo model to the contemporary scene and uses it to shed light on policy solutions to the current predicament.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 06/2012.
Length: 34 pages
Date of creation: 27 Feb 2012
Date of revision:
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More information through EDIRC
financial crisis; investment; monetary and fiscal policies;
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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