A Brief History of Macroeconomics
Name
Pre-Industrial
People
Smith, Hume
Brief Description
Markets Matter
Long Run – Supply Creates Demand;
Short Run -- Credit Problems
Demand Determines Output
Short Run – Aggregate Demand
Long Run – Capital Spurs Growth
Post WWII Growth,
Mild/Moderate Recession
Individuals Are Forward-Looking;
Policy Games
High inflation, high
unemployment
No major macro policy,
Social issues arising
Debt-financed spending
stimulus
Fiscal & monetary stimulus,
Phillips Curve tradeoff debate;
Development focus on capital
Systemic policy offset by
responses (Lucas Critique)
Taxes/Regulation Inhibit Growth
See 1970s
Tax reform; deregulation
Supply Shocks Explain Recessions;
(“real” business cycles)
Short Run – Demand & Supply
Long Run – Supply
Protections, and Institutions Matter
for Long Term Growth
See 1970s
1980s1990s
1990s2000s
Say, Fisher,
Mises
Keynes, Hicks,
Samuelson
Modigliani,
Tobin,Friedman,
Solow
Friedman,
Phelps, Lucas,
Barro, Prescott
Laffer,
Lindsey
Prescott,
Hamilton
Mankiw,
King
Barro,
Acemoglu
Events
Longstanding world
poverty; emerging growth
Long Recession 1870s
Bank Panic 1907
Great Depression 1930s
Fiscal policy vanishes;
Rules for monetary policy
Same as above
MacroFinance 1990s2000s
Minsky,Shiller,
Barro, Cochrane
Financial Influences Macro,
Macro Influences Financial
Macro Wars
Eggertson,
Ramey, Blogger
Wars
Policy At Zero Interest Bound;
Financial Market Turmoil;
Government Constraints Matter
Financial market
explosion,
Booms/busts in credit
Crash & recession of 2008
Classical
Keynes
Synthesis
Date
pre1800
Pre1930
1930s1960s
1960s1970s
Rational
Expectations
1970s1980s
Populist
Supply Side
Academic
Supply Side
New
Synthesis
New Growth
Economics
1980s
1980s
2008-
Long Term Growth,
Mild/Moderate Recessions
Breakdown of Soviet
Empire
Policy
Early freedoms/protections
More capital is not enough for
development
???
Fiscal & monetary debates;
GDP targeting;
Banking/credit regulation