The State of Macro
Olivier J. Blanchard
National Bureau of Economic Research (NBER); Peter G. Peterson Institute for International Economics
August 12, 2008
MIT Department of Economics Working Paper No. 08-12
For a long while after the explosion of macroeconomics in the 1970s, the field looked like a battle field. Over time however, largely because facts do not go away, a largely shared vision both of fluctuations and of methodology has emerged. Not everything is fine. Like all revolutions, this one has come with the destruction of some knowledge, and suffers from extremism and herding. None of this is deadly however. The state of macro is good.
The first section sets the stage with a brief review of the past. The second argues that there has been broad convergence in vision, and the third reviews the specifics. The fourth focuses on convergence in methodology. The last looks at current challenges.
Number of Pages in PDF File: 32
Keywords: Macroeconomics, shocks, propagation mechanisms, fluctuations
JEL Classification: E20, E30, E40
Date posted: August 20, 2008 ; Last revised: August 26, 2008