Palacio Vera, Alfonso (2002) The modern view of macroeconomics : some critical reflections. [ Documentos de Trabajo de la Facultad de Ciencias Económicas y Empresariales; nº 17, 2002, ISSN: 2255-5471 ]
Creative Commons Attribution Non-commercial Share Alike.
Official URL: http://eprints.ucm.es/6796/
Romer has proposed an alternative macroeconomic framework, i.e., the IS-MP-IA model. Its proponents claim that it constitutes a ‘modern’ view of macroeconomics. We show that the new framework is closely attached to the neoclassical synthesis and, in addition, fails to take account of: (i) the recent empirical evidence on the short-run output-inflation trade-off, (ii) the recent work and evidence on the interdependence of aggregate demand and supply, (iii) the limits of monetary policy and (iv) the consequences for demand-management policy of (i), (ii) and (iii). Once all these aspects are incorporated, we have that short-run stabilization policy is non-neutral in the long run, loanable funds theory becomes irrelevant and aggregate demand becomes the crucial exogenous variable in the short run and, perhaps, also in the long run.
|Item Type:||Working Paper or Technical Report|
Códogos JEL: A22, E10, E50, E60
|Uncontrolled Keywords:||Neutrality of money; NAIRU; Natural rate of interest; Aggregate demand.|
|Subjects:||Social sciences > Economics > Macroeconomics|
|Series Name:||Documentos de Trabajo de la Facultad de Ciencias Económicas y Empresariales|
Aberg, R. (2001): “Equilibrium unemployment, search behaviour and unemployment persistency”, Cambridge Journal of Economics, 25(2), pp. 131-47.
Allsopp, C. and D. Vines (2000); “The Assessment: Macroeconomic Policy”, Oxford Review of Economic Policy, 16(4), pp. 1-32.
Allyn Young (1928); “Increasing Returns and Economic Progress”, Economic Journal, 38(152), December, pp. 527-42.
Ball, L. (1999): “Aggregate Demand and Long-Run Unemployment”, Brookings Papers on Economic Activity, 2, pp. 189-236.
Bank of England (1999); “The transmission mechanism of monetary policy”, Bank of England Quarterly Bulletin, 39 (2), May, pp.1–12.
Bernanke, B.S. and F.S. Mishkin (1997); “Inflation Targeting: A New Framework for Monetary Policy?”, Journal of Economic Perspectives, 11(2), Spring, pp. 97-116.
Bernanke, B.S., T. Laubach, F.S. Mishkin and A.S. Posen (1999); Inflation Targeting: Lessons from the International Experience, Princeton: Princeton University Press.
Blanchard, O.J. and L. H. Summers (1987): “Hysteresis in Unemployment”, European Economic Review, 31, pp. 288-295.
Blanchard, O.J. and L.H. Summers (1988); “Beyond the Natural Rate Hypothesis”, American Economic Review, Papers and Proceedings, 78(2), May, pp. 182-87.
Blinder, A. (1988); “The Fall and Rise of Keynesian Economics”, Economic Record, 64(187), December, pp. 278-94.
Clarida, R., J. Galí, and M. Gertler (1999); “The science of monetary policy: a New Keynesian perspective”, Journal of Economic Literature, 37 (4), pp. 1661–707.
Chick, V. (1983); Macroeconomics After Keynes, Cambridge (MA): The MIT Press.
Cross, R. (ed.) (1995); The Natural Rate of Unemployment, Cambridge, UK: Cambridge University Press.
Davidson, P. (1972); Money and the Real World, London: Macmillan.
Davidson, P. (1978); “Why money matters: lessons from a half-century of monetary theory”, Journal of Post Keynesian Economics, 1(1), pp. 46-70.
Davidson, P. (1984); “Reviving Keynes´s Revolution”, Journal of Post Keynesian Economics, 6(4), Summer, pp. 561-75.
De Long, J.B. (1999); “Should We Fear Deflation?”, Brookings Papers on Economic Activity, 1, pp. 225-52.
Eisner, R. (1997); “A new view of the NAIRU”, in P. Davidson and J. A. Kregel (eds.) Improving the Global Economy. Keynesianism and the Growth in Output and Employment, Cheltenham (UK): Edward Elgar.
European Central Bank (2001); The Monetary Policy of the ECB, Internet document, http:\\www.ecb.de/pub/pdf/monetarypolicy2001.pdf
Fair, R.C. (1997a); “Testing the NAIRU Model for 27 Countries”, Cowles Foundation, April.
Fair, R.C. (1997b); “Estimated inflation costs had European unemployment been reduced in the 1980s by macro policies”, Cowles Foundation, December.
Fair, R.C. (2000); “Testing the NAIRU model for the United States”, Review of Economics and Statistics, 82(1), pp. 64-71.
Fair, R.C. (2001a); “Is there empirical support for the ‘modern’ view of macroeconomics?”, Cowles Foundation Discussion Paper, No.1300, April.
Fair, R.C. (2001b); “Actual Federal Reserve Policy Behavior and Interest Rate Rules”, Federal Reserve Bank of New York Economic Policy Review, 7(1), pp. 61-72.
Fazzari, S.M., P. Ferri and E. Greenberg (1998); “Aggregate demand and firm behavior: a new perspective on Keynesian microfoundations”, Journal of Post Keynesian Economics, 20(4), pp. 495-526.
Fontana, G. and Palacio-Vera, A. (2002); “Monetary policy rules: what are we learning?”, Journal of Post Keynesian Economics, 24(4), pp. 547-568.
Galbraith, J. (1997); “Time to Ditch the NAIRU”, Journal of Economic Perspectives, 11(1), pp. 93-108.
Goodfriend, M. (1991); “Interest rates and the conduct of monetary policy”, Carnegie–Rochester Conference Series on Public Policy, 34 (1), pp. 7–30.
Gordon, R. (1997); “The Time-Varying NAIRU and its Implications for Economic Policy”, Journal of Economic Perspectives, 11(1), Winter, pp. 11-32.
Judd, J.P. and G.D. Rudebusch (1998); “Taylor´s Rule and the Fed: 1970-1997”, Federal Reserve Bank of San Francisco Economic Review, 3(361), pp. 3-16.
Kaldor, N. (1972); “The Irrelevance of Equilibrium Economics”, Economic Journal, 82(328), December, pp. 1237-55.
Kalecki, M. (1944); “Professor Pigou on the ‘Classical Stationary State’ – A Comment”, Economic Journal, Vol. 54, April, pp. 131-32.
Keynes, J.M. (1936); The General Theory of Employment, Interest and Money, London: Macmillan.
Keynes, J.M. (1937); “The General Theory of Employment”, Quarterly Journal of Economics, February, pp. 209-23.
Laxton, D, D. Rose and D. Tambakis (1999): “The U.S. Phillips curve: The case for asymmetry”, Journal of Economic Dynamics and Control, 23, pp. 1459-85.
Layard, R., S. Nickell, and R. Jackman (1991); Unemployment: Macroeconomic Performance and the Labour Market, Oxford: Oxford University Press.
Lavoie, M. (1996); “Monetary Policy in an Economy with Endogenous Credit Money”, in G. Deleplace and E.J. Nell (eds.), Money in Motion: The Post Keynesian and Circulation Approaches, pp. 532-545, London: Macmillan.
León-Ledesma, M.A. and A.P. Thirlwall (2002); “The endogeneity of the natural rate of growth”, Cambridge Journal of Economics, 26, July, pp. 441-59.
Moore, B.J. (1988); Horizontalists and Verticalists: The Macroeconomics of Credit Money. New York: Cambridge University Press.
Orphanides, A. and D.W.Wilcox (1996); “The Opportunistic Approach to Disinflation”, Board of Governors of the Federal Reserve System, May.
Orphanides, A., D.H. Small, V. Wieland and D.W. Wilcox (1997); “A Quantitative Exploration of the Opportunistic Approach to Disinflation”, Board of Governors of the Federal Reserve System, June.
Orphanides, A. and V. Wieland (2000); “Inflation zone targeting”, European Economic Review, 44, pp. 1351-87.
Palley, T.I. (2002); “Endogenous money: what it is and why it matters”, Metroeconomica, 53(2), pp. 152-80.
Patinkin, D. (1948); “Price flexibility and full employment”, American Economic Review, 38, pp. 543-64.
Reprinted in F.A. Lutz and L.W. Mints (eds.) Readings in Monetary Theory, Ch.13, pp. 252-83, London: George Allen and Unwin Ltd.
Patinkin, D. (1965); Money, Interest, and Prices, 2nd edition, New York: Harper and Row.
Pigou, A.C. (1943); “The Classical Stationary State”, Economic Journal, Vol. 53, December, pp. 343-51.
Romer, D. (1999); “Short-Run Fluctuations”, Working Paper, August, University of California, Berkeley.
Romer, D. (2000); “Keynesian Macroeconomics without the LM Curve”, Journal of Economics Perspectives, 14(2), Spring, pp. 149-69.
Rowthorn, R. (1999); “Unemployment, wage bargaining and capital-labour substitution”, Cambridge Journal of Economics, 23(4), pp. 413-26.
Sawyer, M.C. (2001); “The NAIRU: a critical appraisal”, in P. Arestis and M.C. Sawyer (eds.) Money, Finance and Capitalist Development, pp. 220-54, Cheltenham, UK: Edward Elgar.
Sawyer, M.C. (2002); “The NAIRU, Aggregate Demand and Investment”, Metroeconomica, 53(1), pp. 66-94.
Setterfield, M.A., D.V. Gordon and L. Osberg (1992): “Searching for a Will o´the Wisp: An empirical study of the NAIRU in Canada”, European Economic Review, 36, pp. 119-36.
Setterfield, M. (ed.) (2002); The Economics of Demand-led Growth, Cheltenham, UK: Edward Elgar.
Shackle, G.L.S. (1946); “Interest Rates and the Pace of Investment”, Economic Journal, 56 (221), March, pp. 1-17.
Solow, R.M. (1997); “Is There a Core of Usable Macroeconomics We Should All Believe In?”, American Economic Review, Papers and Proceedings, May, pp. 230-32.
Solow, R.M. and J.B. Taylor (1998); Inflation, Unemployment, and Monetary Policy, Cambridge, MA: The MIT Press.
Staiger, D., J.H. Stock, and M.W. Watson (1997); “The NAIRU, Unemployment and Monetary Policy”, Journal of Economic Perspectives, 11(1), Winter, pp. 33-49.
Stiglitz, J.E. (1988); “Money, Credit, and Business Fluctuations”, Economic Record, 64 (187), December, pp. 307-22.
Svensson, L.E.O. (1999); “Inflation targeting as a monetary policy rule”, Journal of Monetary Economics, 43, pp. 607-54.
Taylor, J.B. (1993); “Discretion Versus Policy Rules in Practice”, Carnegie-Rochester Conference Series on Public Policy, 39, pp. 195-214.
Taylor, J.B. (1994): “The Inflation/Output Variability Trade-off Revisited”, in J.G. Fuhrer (ed.) Goals, Guidelines, and Constraints Facing Monetary Policymakers, Federal Reserve Bank of Boston, Conference Series No.38, pp. 21-38.
Taylor, J.B. (1997); “A Core of Practical Macroeconomics”, American Economic Review, Papers and Proceedings, 87(2), May, pp. 233-35.
Taylor, J.B. (1999a); “The Robustness and Efficiency of Monetary Policy Rules as Guidelines for Interest Rate Setting by the European Central Bank”, Journal of Monetary Economics, 43(3), pp. 655-79.
Taylor, J.B. (1999b); “A historical analysis of monetary policy rules” in J.B. Taylor (ed.) Monetary Policy Rules, pp. 319–41, Chicago: University of Chicago Press.
Taylor, J.B. (2000); “Teaching Modern Macroeconomics at the Principles Level”, American Economic Review, Papers and Proceedings, 90(2), May, pp. 90-94.
Tobin, J. (1955); “A Dynamic Aggregative Model”, Journal of Political Economy, Vol. 63, April, pp. 103-15.
Tobin, J. (1975); “Keynesian Models of Recession and Depression”, American Economic Review, Papers and Proceedings, 65(2), May, pp. 195-202.
Tobin, J. (1993); “Price Flexibility and Output Stability: An Old Keynesian View”, Journal of Economic Perspectives, 7(1), Winter, pp. 45-65.
Wicksell, K. (1936; 1965); Interest and Prices, translated by R.F. Kahn, New York: Augustus M. Kelly.
|Deposited On:||30 Nov 2007|
|Last Modified:||02 Nov 2015 10:44|
Repository Staff Only: item control page