What Do We Know about Macroeconomics that Fisher and Wicksell Did Not?

Olivier Blanchard

The Quarterly Journal of Economics, 2000, vol. 115, issue 4, 1375-1409

Abstract: This essay argues that the history of macroeconomics during the twentieth century can be divided into three epochs. Pre-1940: a period of exploration, during which all the right ingredients were developed. But also a period where confusion reigned, because of the lack of an integrated framework. From 1940 to 1980: a period during which an integrated framework was developed—from the IS-LM to dynamic general equilibrium models. But a construction with an Achilles'heel, too casual a treatment of imperfections, leading to a crisis in the late 1970s. Since 1980: a new period of exploration, focused on the role of imperfections in macroeconomics. Exploration often feels like confusion. But behind it is one of the most productive periods of research in macroeconomics.

Date: 2000
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