The Role of Economic Policy After the New Classical Macroeconomics
The paper considers the implications of the rational expectations - New Classical Macroeconomics revolution for the "rules versus discretion" debate. The following issues are covered 1) The ineffectiveness of anticipated stabilization policy, 2) Non-causal models and rational expectations, 3) optimal control in non-causal models -the inconsistency of optimal plans. I established the robustness of the proposition that contingent (closed-loop or feedback) rules dominate fixed (open-loop) rules. The optimal contingent rule in non-causal models - the innovation or disturbance-contingent feedback rule - is quite different from the state-contingent feedback rule derived by dynamic stochastic programming
|Date of creation:||Nov 1980|
|Date of revision:|
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- Willem H. Buiter, 1980.
"The Role of Economic Policy after the New Classical Macroeconomics,"
NBER Working Papers
0580, National Bureau of Economic Research, Inc.
- Willem H. Buiter, 1980. "The Role of Economic Policy After the New Classical Macroeconomics," NBER Technical Working Papers 0006, National Bureau of Economic Research, Inc.
- Barro, Robert J, 1977.
"Unanticipated Money Growth and Unemployment in the United States,"
American Economic Review,
American Economic Association, vol. 67(2), pages 101-15, March.
- Robert J. Barro, 1976. "Unanticipated Money Growth and Unemployment in the United States," Working Papers 234, Queen's University, Department of Economics.
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