What They Were Thinking Then: The Consequences for Macroeconomics during the Past 60 Years
AbstractThis article explores the development of Keynesian macroeconomics in its early years, and especially in the Big Bang period immediately after the publication of The General Theory. In this period, as standard macroeconomics evolved into the "Keynesian-neoclassical synthesis," its promoters discarded many of the insights of The General Theory. The paradigm that was adopted had some advantages. But its simplifications have had serious consequences—including immense regulatory inertia in response to massive changes in the financial system and unnecessarily narrow application of accelerationist considerations (regarding inflation expectations).
CitationAkerlof, George A. 2019. "What They Were Thinking Then: The Consequences for Macroeconomics during the Past 60 Years." Journal of Economic Perspectives, 33 (4): 171-86. DOI: 10.1257/jep.33.4.171
- B22 History of Economic Thought: Macroeconomics
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
- E31 Price Level; Inflation; Deflation
- E44 Financial Markets and the Macroeconomy
- L51 Economics of Regulation