Expectations, Employment and Prices: A Suggested Interpretation of the New ‘Farmerian’ Economics
AbstractThis paper aims at providing a critical assessment of the new ‘Farmerian’ economics, i.e. the recent Farmer’s attempt to provide a new micro-foundation of the General Theory grounded on modern search and business cycle theories. Specifically, I develop a theoretical model that summarizes the main arguments of the suggested approach by showing that a special importance has to be attached to the search mechanism, the choice of units and ‘animal spirits’ modelling. Thereafter, referring to self-made real-business-cycle experiments, I discuss the main empirical implications of the resulting framework. Finally, I consider its policy implications by stressing the problematic nature of demand management interventions and the advisability of extending the role of the central bank in preventing financial bubbles and crashes.
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Bibliographic InfoPaper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2011/116.
Date of creation: 05 Jan 2011
Date of revision:
New ‘Farmerian’ Economics; Search Theory; Demand Constrained Equilibrium; Bubbles and Crashes.;
Other versions of this item:
- Guerrazzi, Marco, 2010. "Expectations, employment and prices: a suggested interpretation of the new 'farmerian' economics," MPRA Paper 30832, University Library of Munich, Germany.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-01 (All new papers)
- NEP-CBA-2011-10-01 (Central Banking)
- NEP-HPE-2011-10-01 (History & Philosophy of Economics)
- NEP-MAC-2011-10-01 (Macroeconomics)
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