How macroeconomists lost control of stabilization policy: towards dark ages

Jean-Bernard Chatelain and Kirsten Ralf

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Abstract: This paper is a study of the history of the transplant of mathematical tools using negative feedback for macroeconomic stabilisation policy from 1948 to 1975 and the subsequent break of the use of control for stabilisation policy which occurred from 1975 to 1993. New-classical macroeconomists selected a subset of the tools of control that favoured their support of rules against discretionary stabilisation policy. The Lucas critique and Kydland and Prescott's time-inconsistency were over-statements that led to the "dark ages" of the prevalence of the stabilisation-policy-ineffectiveness idea. These over-statements were later revised following the success of the Taylor rule.

Keywords: Control; Stabilisation policy ineffectiveness; Negative feedback; Dynamic games (search for similar items in EconPapers)
Date: 2020-11
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Citations: View citations in EconPapers (2)

Published in European Journal of the History of Economic Thought, 2020, 27 (6), pp.938-982. ⟨10.1080/09672567.2020.1817119⟩

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Related works:
Working Paper: How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages (2020)
Working Paper: How macroeconomists lost control of stabilization policy: towards dark ages (2020)
Working Paper: How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages (2020)
Working Paper: How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages (2020)
Working Paper: How Macroeconomists Lost Control of Stabilization Policy: Towards Dark Ages (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03029894

DOI: 10.1080/09672567.2020.1817119

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