The Relevance of Haavelmo's Macroeconomic Theorizing for Contemporary Macro Policy Making

Sheetal Chand

Nordic Journal of Political Economy, 2012, vol. 37, 3

Abstract: This paper reviews Haavelmo’s basic macroeconomic model, and argues that even though it was minted in the 1950s it remains highly relevant today. Key features that contribute to its relevance are that it integrates balance sheet transactions with flow activities such as production, consumption, and investment; allows shocks emanating from either the financial or real sides to impact on the other; and provides a unified theory of how underemployment and full employment can be generated. These features have not been adequately dealt with in the current dynamic stochastic general equilibrium (DSGE) paradigm.

JEL-codes: E22 E44 E52 E63 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:noj:journl:v:37:y:2012:p:3

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