Law and Macroeconomics: The Law and Economics of Recessions

61 Pages Posted: 25 Aug 2016 Last revised: 21 Sep 2016

Date Written: September 1, 2016


In this Article, I offer a macroeconomic perspective on law that reshapes the microeconomic perspective that currently dominates law and economics. I argue that 1. The economy works one way in ordinary economic conditions, in which supply capacity determines output, and a different way in deep recessions, in which demand for spending determines output. 2. Because the economy functions differently in deep recessions than in ordinary times, a law causes one set of effects in deep recessions and a different set of effects at other times. 3. Because the same law has different effects at different times, law should be different in deep recessions than in other times. Specifically, law should do more to promote spending in deep recessions than in ordinary economic conditions. Because the stakes of deep recessions are so high (tens of trillions of dollars in lost output, countless lives impaired, and political upheaval), I argue that the (significant) costs associated with introducing macroeconomics into law are worth bearing.

Keywords: Keynes, Macroeconomics, Regulation, Stimulus

JEL Classification: E1, E3, E4, E6, K1, K2, K3, K4

Suggested Citation

Listokin, Yair, Law and Macroeconomics: The Law and Economics of Recessions (September 1, 2016). Yale Law School, Public Law Research Paper No. 576; Yale Law & Economics Research Paper No. 559. Available at SSRN: or

Yair Listokin (Contact Author)

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-436-2567 (Phone)

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