Critical Essay on Modern Macroeconomic Theory - Hardcover

Hahn, Frank; Solow, Robert

Hardcover

ISBN 10: 0631134832 ISBN 13: 9780631134831

Publisher: Wiley–Blackwell, 1996

Synopsis

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

Following an explanation of microeconomic foundations, chapters introduce the basic elements for a better macro–model. The model is simple, but combined with the appropriate model of the labor market it can say useful things about the fluctuation of employment, the correlation between wages and employment, and the role for corrective monetary policy.

About this title

Review

"Like the great debate between Einstein and Bohr on quantum physics,the debate between Hahn-Solow and Lucas's rational expectationismis a must for all serious students of macro. This is how scientificprogress should be done--by sober analysis rather than cleverrhetoric or frenzied ideology." Paul A. Samuelson, Professor of Economics, M.I.T. "Professors Hahn and Solow pick up the simple general equilibrium models of new classical macroeconomics and run with them. Of course, they head off in directions that are theirs alone. Critics of these models, and enthusiasts, will want to read this book and see how far they get." Paul M. Romer, Professor of Economics, University of Californiaat Berkeley

From the Back Cover

In the early 1980s, rational expectations and new classical economics dominated macroeconomic theory. This essay evolved from the authors′ profound disagreement with that trend. It demonstrates not only how the new classical view got macroeconomics wrong, but also how to go about doing macroeconomics the right way.

Hahn and Solow argue that what was originally offered as a normative model based on perfect foresight and universal perfect competition has been almost casually transformed into a model for interpreting real macroeconomic behavior. After explaining microeconomic foundations, the authors introduce a better macro model, one that can say useful things about the fluctuation of employment, the correlation between wages and employment, and the role for corrective monetary policy.

About this edition

• Publisher: Wiley–Blackwell
• Publication date: 1996
• ISBN 10: 0631134832
• ISBN 13: 9780631134831
• Binding: Hardcover
• Number of pages: 168