Expectations, Employment and Prices: A Suggested Interpretation of the New «Farmerian» Economics

Marco Guerrazzi

Politica economica, 2012, issue 3, 369-395

Abstract: This paper aims at providing a critical assessment of the New «Farmerian» economics, i.e., Farmer's attempt to provide a fresh micro-foundation of the General Theory grounded on modern search and business cycle theories with the goal of offering a rationale for finance-induced recessions. Specifically, I develop a model that summarizes the main arguments of the suggested approach by showing that a special importance has to be paid to the search mechanism, the choice of units and «animal spirits» modelling. Thereafter, referring to recent computational experiments, I discuss some possible empirical implications of the resulting framework. Finally, I put forward the lines for new theoretical and empirical developments by sketching the policy implications towards which the new Farmerian economics might lead.

Keywords: Old keynesian economics; search; demand constrained equilibrium; Shimer puzzle; asset price stabilization. (search for similar items in EconPapers)
Date: 2012
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Related works:
Working Paper: Expectations, Employment and Prices: A Suggested Interpretation of the New 'Farmerian' Economics (2011)
Working Paper: Expectations, employment and prices: a suggested interpretation of the new 'farmerian' economics (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mul:je8794:doi:10.1429/74179:y:2012:i:3:p:369-395

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