Munich Personal RePEc Archive

How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages

Chatelain, Jean-Bernard and Ralf, Kirsten (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)

This is the latest version of this item.

[img]
Preview
PDF
MPRA_paper_103244.pdf

Download (1MB) | Preview

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. New-classical 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 time-inconsistency were over-statements that led to the "dark ages" of the prevalence of the stabilization-policy-ineffectiveness idea. These over-statements were later revised following the success of the Taylor rule.

Available Versions of this Item

Logo of the University Library LMU Munich
MPRA is a RePEc service hosted by
the University Library LMU Munich in Germany.