Macroeconomic Stabilization Goal, Policy And Instruments

The Fraud of Macroeconomic Stabilization Policy

The details of the future will remain forever veiled to us. But give a gypsy seer a Ph.D. in economics and arm her with statistics and mathematical models, and people suddenly start taking her seriously. She will be invited to testify before Congress and held up by State TV as an expert in business forecasting. But from an analytical point of view, what she does is no different from what she di...

Stabilization versus Sustainability: Macroeconomic Policy Tradeoffs∗

Worldwide monetary and fiscal policies in the past few years have put into sharp relief the fundamental tradeoff between short-run stabilization and long-run sustainability that policymakers face. The paper is organized around this question: How do the effects of routine monetary and fiscal operations designed to achieve macroeconomic stabilization objectives change when the economy moves from ...

Robustness and Macroeconomic Policy

This paper considers the design of macroeconomic policies in the face of uncertainty. In recent years, several economists have advocated that when policymakers are uncertain about the environment they face and find it difficult to assign precise probabilities to the alternative scenarios that may characterize this environment, they should design policies to be robust in the sense that they mini...

Macroeconomic Policy and Performance

The Welfare Effects of Alternative Choices of Instruments and Targets for Macroeconomic Stabilisation Policy

Many debates in macroeconomic policy involve arguments about the appropriate choice of instruments and targets for stabilisation. Keynesian aggregate-demandmanagement policy was centred on the use of fiscal instruments to stabilise the level of employment or real activity in the short term. The monetarists of the late 1970s favoured the use of monetary instruments to stabilise the growth rate o...