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Macroeconomic Confusion

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  • Schlicht, Ekkehart

Abstract

This note critically evaluates the New Classical Macroeconomics from a Marshallian perspective. Revisiting the famous Keynes-Tinbergen controversy, it is argued that Keynes' criticism comprises the "Lucas critique," and that it is misleading to label this a critique of Keynesian economics. The postulate of immutable economic structures carries Tinbergen's approach to the extreme and neglects the possibility of slowly changing structures, as conceived by Marshall. The position is defended by arguments about equilibrium and rationality that are admittedly empty.

Suggested Citation

  • Schlicht, Ekkehart, 2006. "Macroeconomic Confusion," Discussion Papers in Economics 886, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenec:886
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    References listed on IDEAS

    as
    1. Jesper Linde, 2001. "Testing for the Lucas Critique: A Quantitative Investigation," American Economic Review, American Economic Association, vol. 91(4), pages 986-1005, September.
    2. Laurence Ball & N. Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 115-136, Fall.
    3. Robert E. Lucas & Thomas J. Sargent, 1979. "After Keynesian macroeconomics," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 3(Spr).
    4. Michael Athans, 1974. "The Importance of Kalman Filtering Methods for Economic Systems," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 49-64, National Bureau of Economic Research, Inc.
    5. Cooley, Thomas F & Prescott, Edward C, 1973. "An Adaptive Regression Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 364-371, June.
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    More about this item

    Keywords

    macroeconomics; real business cycles; Lucas critique; Marshall; Keynes; Tinbergen; time-varying coefficients; adaptive estimation; Kalman filter; equilibrium;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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