A Critical Essay on Modern Macroeconomic Theory - Couverture rigide

Macroeconomics began as the study of large–scale economicpathologies such as prolonged depression, mass unemployment andpersistent inflation. In the early 1980s rational expectations andnew classical economics dominated macroeconomic theory, with theresult that such pathologies can hardly be discussed within thevocabulary of the theory. This book evolved from the authors′profound disagreement with that trend. It demonstrates not only howthe new classical view got macroeconomics wrong, but how to goabout doing macroeconomics the right way.

Following an explanation of microeconomic foundations, chaptersintroduce the basic elements for a better macro–model. The model issimple, but combined with the appropriate model of the labor marketit can say useful things about the fluctuation of employment, thecorrelation between wages and employment, and the role forcorrective monetary policy.

In the early 1980s, rational expectations and new classicaleconomics dominated macroeconomic theory. This essay evolved fromthe authors′ profound disagreement with that trend. It demonstratesnot only how the new classical view got macroeconomics wrong, butalso how to go about doing macroeconomics the right way.

Hahn and Solow argue that what was originally offered as anormative model based on perfect foresight and universal perfectcompetition has been almost casually transformed into a model forinterpreting real macroeconomic behavior. After explainingmicroeconomic foundations, the authors introduce a better macromodel, one that can say useful things about the fluctuation ofemployment, the correlation between wages and employment, and therole for corrective monetary policy.