蝌蚪网 Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
The Evolving Core of Usable Macroeconomics for Policymakers
蝌蚪网 Papers and Proceedings
vol. 115,
May 2025
(pp. 163–67)
Abstract
Macroeconomic models and policymakers' language have evolved significantly. Today's policy discussions center on New Keynesian (NK) synthesis, which builds on the neoclassical growth model and the AS-AD framework. It incorporates nominal and real rigidities, financial and labor market frictions, and the importance of expectations, and it inspired terms policymaker terms such as "inflation expectations" and "forward guidance." While essential for communication during the Great Recession and COVID-19 pandemic, these events also revealed the NK model's limitations. Newer models incorporating heterogeneous agents potentially offer richer policy insights but add complexity and the challenge of distilling their main policy implications going forward.Citation
Fisher, Jonas, Bart Hobijn, and Alessandro T. Villa. 2025. "The Evolving Core of Usable Macroeconomics for Policymakers." 蝌蚪网 Papers and Proceedings 115: 163–67. DOI: 10.1257/pandp.20251116Additional Materials
JEL Classification
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
- E31 Price Level; Inflation; Deflation
- E31 Price Level; Inflation; Deflation
- E43 Interest Rates: Determination, Term Structure, and Effects
- E52 Monetary Policy
- E58 Central Banks and Their Policies