5 Pages Posted: 12 Aug 2011
Date Written: September 21, 2010
There are three great challenges facing researchers in modern macroeconomics today, all brought into sharp relief by the recent financial crisis. The first is to find more realistic, and yet tractable, ways to incorporate financial market frictions into our canonical models for analyzing monetary policy. The second is to rethink the role of countercyclical fiscal policy, particularly in the response to a financial crisis where credit markets seize. A third great challenge is to achieve a better cost‐benefit analysis of financial market regulation.
Suggested Citation: Suggested Citation
Rogoff, Kenneth, Three Challenges Facing Modern Macroeconomics (September 21, 2010). American Economic Association, Ten Years and Beyond: Economists Answer NSF's Call for Long-Term Research Agendas. Available at SSRN: https://ssrn.com/abstract=1889366 or http://dx.doi.org/10.2139/ssrn.1889366