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A Critical Essay on Modern Macroeconomic Theory

A Critical Essay on Modern Macroeconomic Theory

Frank H. Hahn, Robert Solow

ISBN: 978-0-631-20989-8

Apr 1998, Wiley-Blackwell

172 pages

Select type: Paperback

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Macroeconomics began as the study of large-scale economic pathologies such as prolonged depression, mass unemployment and persistent inflation. In the early 1980s rational expectations and new classical economics dominated macroeconomic theory, with the result that such pathologies can hardly be discussed within the vocabulary of the theory. This book evolved from the authors' profound disagreement with that trend. It demonstrates not only how the new classical view got macroeconomics wrong, but how to go about doing macroeconomics the right way.

Following an explanation of microeconomic foundations, chapters introduce the basic elements for a better macro-model. The model is simple, but combined with the appropriate model of the labor market it can say useful things about the fluctuation of employment, the correlation between wages and employment, and the role for corrective monetary policy.


1. Introduction.

2. Perfectly Flexible Wages.

3. Imperfect Wage Flexibility.

4. Imperfect Competition.

5. The Labor Market.

6. Macroeconomics.

7. Conclusions.




* Written by two of the world's most distinguished economists.

Frank Hahn is Professor Ordinario at the University of Sienna, Professor Emeritus of Cambridge University, and Fellow of Churchill College.

* Robert Solow received the Nobel Prize in economics in 1987 for his macroeconomic reasearch linking technology and growth.