Working Paper: NBER ID: w14259
Authors: Olivier J. Blanchard
Abstract: For a long while after the explosion of macroeconomics in the 1970s, the field looked like a battlefield. Over time however, largely because facts do not go away, a largely shared vision both of fluctuations and of methodology has emerged. Not everything is fine. Like all revolutions, this one has come with the destruction of some knowledge, and suffers from extremism and herding. None of this deadly however. The state of macro is good. \n \nThe first section sets the stage with a brief review of the past. The second argues that there has been broad convergence in vision, and the third reviews the specifics. The fourth focuses on convergence in methodology. The last looks at current challenges.
Keywords: macroeconomics; fluctuations; nominal rigidities; technological shocks
JEL Codes: E0; E2; E3; E4; E5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shifts in aggregate demand (E00) | output (C67) |
| optimistic consumer behavior (D12) | output (C67) |
| nominal rigidities (D50) | output (C67) |
| technological progress (O33) | output (C67) |
| anticipations about future demand (D84) | short-term fluctuations (E32) |
| real wage rigidity (J31) | effects of demand shifts on economic activity (E00) |