Macroeconomics After Two Decades of Rational Expectations

Bennett T. McCallum

NBER Working Paper No. 4367 (Also Reprint No. r1911)
Issued in September 1994
NBER Program(s):   EFG   ME

This expository paper describes major developments during the second decade of rational-expectations macroeconomics, roughly 1982-1991. Topics attracting the most attention from researchers differed from those of 1972-1981, with considerable emphasis being devoted to technical mailers. Here the discussion focuses on four prominent areas: real business cycle analysis, growth theory and its empirical application, issues involving unit roots in macroeconomic time series, and sticky-price models of aggregate supply. The paper concludes by arguing that the current state of knowledge in macroeconomics is not as bad as is often suggested.

(1149 K)

Published: Journal of Economic Education, Vol. 25, no. 3, pp. 219-234, (Summer 1994).

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