Preface
Published online by Cambridge University Press: 10 August 2009
Summary
If business cycles were simply efficient responses of quantities and prices to unpredictable shifts in technology and preferences, there would be no need for distinct stabilization or demand management policies…. If, on the other hand, rigidities of some kind prevent the economy from reacting efficiently to nominal or real shocks, or both, there is a need to design suitable policies and to assess their performance. In my opinion, this is the case: I think the stability of monetary aggregates and nominal spending in the postwar United States is a major reason for the stability of aggregate production and consumption during these years, relative to the experience of the interwar period and the contemporary experience of other economies.
Robert E. Lucas Jr. (2003: 11)The theory of economic policy occupies a central place in academia and government. This book addresses concerns in both communities. For academics, this book examines the ongoing scientific endeavor to determine the most accurate role for policymakers is in stabilizing it. Scientific controversies center on such issues as the relation between inflation and real outcomes and how these disagreements influence the supposed effectiveness of policy. In more technical language, a particular scientific controversy of interest to us is the evolution in thinking about the slope of the Phillips curve and how this has influenced policy and outcomes (see Akerlof et al. 2000).
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- The Role of Policymakers in Business Cycle Fluctuations , pp. xix - xxviPublisher: Cambridge University PressPrint publication year: 2006