Tag: new classical macroeconomics

Lucas and the welfare cost of the business cycle

Sargent (1981) on the credibility of Thatcherism

Greg Mankiw on the zero influence of modern macroeconomics on monetary policy making

Two of my brothers studied economics in the early 1970s and then went on to different paths in law and computing respectively. If Greg Mankiw is right, my two older brothers could happily conduct a conversation with a modern central banker. Their 1970s macroeconomics, albeit batting for memory, would be enough for them to hold their own.


Source: AEAweb: JEP (20,4) p. 29 – The Macroeconomist as Scientist and Engineer – Greg Mankiw (2006).

I would spend my time arguing with a central banker that Milton Friedman may be right and central banks should be replaced with a computer. The success of inflation targeting is forcing me to think more deeply about that position. In particular the rise of pension fund socialism means that most voters are very adverse to inflation because of their retirement savings and that is before you consider housing costs are much largest proportions of household budgets these days.

Lucas and Sargent on why new classical macroeconomics was unpopular

The shrewdest summary of rational expectations economic policy was by Paul Samuelson

Source: Tom Sargent "The Ends of Four Big Inflations

HT: Stephen Williamson