NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Modern Macroeconomics in Practice: How Theory is Shaping Policy

Patrick Kehoe, Varadarajan V. Chari

NBER Working Paper No. 12476
Issued in August 2006
NBER Program(s):   EFG   ME

Theoretical advances in macroeconomics made in the last three decades have had a major influence on macroeconomic policy analysis. Moreover, over the last several decades, the United States and other countries have undertaken a variety of policy changes that are precisely what macroeconomic theory of the last 30 years suggests. The three key developments that have shaped macroeconomic policy analysis are the Lucas critique of policy evaluation due to Robert Lucas, the time inconsistency critique of discre-tionary policy due to Finn Kydland and Edward Prescott, and the development of quantitative dynamic stochastic general equilibrium models following Finn Kydland and Edward Prescott.

download in pdf format
   (231 K)

email paper

This paper is available as PDF (231 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12476

Published: V. V. Chari & Patrick J. Kehoe, 2006. "Modern Macroeconomics in Practice: How Theory Is Shaping Policy," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 3-28, Fall. citation courtesy of

Users who downloaded this paper also downloaded these:
Mankiw w12349 The Macroeconomist as Scientist and Engineer
Blanchard w14259 The State of Macro
Chari and Kehoe w13655 The Heterogeneous State of Modern Macroeconomics: A Reply to Solow
Blanchard w7550 What do we know about Macroeconomics that Fisher and Wicksell did not?
Mankiw w3256 A Quick Refresher Course in Macroeconomics
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us