JeanBernard, Chatelain and Kirsten, Ralf (2020): How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages. Forthcoming in: The European Journal of the History of Economic Thought , Vol. 6, No. 27 (2020)
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Abstract
This paper is a study of the history of the transplant of mathematical tools using negative feedback for macroeconomic stabilization policy from 1948 to 1975 and the subsequent break of the use of control for stabilization policy which occurred from 1975 to 1993. Newclassical macroeconomists selected a subset of the tools of control that favored their support of rules against discretionary stabilization policy. The Lucas critique and Kydland and Prescott's timeinconsistency were overstatements that led to the "dark ages" of the prevalence of the stabilizationpolicyineffectiveness idea. These overstatements were later revised following the success of the Taylor rule.
Item Type:  MPRA Paper 

Original Title:  How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages 
Language:  English 
Keywords:  Control, Stabilization Policy Ineffectiveness, Negative feedback, Dynamic Games 
Subjects:  B  History of Economic Thought, Methodology, and Heterodox Approaches > B2  History of Economic Thought since 1925 > B22  Macroeconomics B  History of Economic Thought, Methodology, and Heterodox Approaches > B4  Economic Methodology > B41  Economic Methodology C  Mathematical and Quantitative Methods > C3  Multiple or Simultaneous Equation Models ; Multiple Variables > C36  Instrumental Variables (IV) Estimation C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61  Optimization Techniques ; Programming Models ; Dynamic Analysis C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62  Existence and Stability Conditions of Equilibrium C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C73  Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games E  Macroeconomics and Monetary Economics > E3  Prices, Business Fluctuations, and Cycles > E32  Business Fluctuations ; Cycles E  Macroeconomics and Monetary Economics > E5  Monetary Policy, Central Banking, and the Supply of Money and Credit > E52  Monetary Policy E  Macroeconomics and Monetary Economics > E6  Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61  Policy Objectives ; Policy Designs and Consistency ; Policy Coordination E  Macroeconomics and Monetary Economics > E6  Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62  Fiscal Policy 
Item ID:  103244 
Depositing User:  JeanBernard Chatelain 
Date Deposited:  06 Oct 2020 14:14 
Last Modified:  06 Oct 2020 14:14 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/103244 
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