Welcome to my thoughts on new macro!
New year, new beginnings. As early as 2010, Blanchard et al discussed the inadequacies of current macroeconomic thinking:
"The great moderation lulled macroeconomists and policymakers alike in the belief that we knew how to conduct macroeconomic policy. The crisis clearly forces us to question that assessment. In this paper, we review the main elements of the pre-crisis consensus, we identify where we were wrong and what tenets of the pre-crisis framework still hold, and take a tentative first pass at the contours of a new macroeconomic policy framework."
I don't think we are there yet, and more importantly I am not even convinced that everyone agrrees on the need for change. I, for one, believe in a total rethink of the way we think about macroeconomics, the role of microeconomics, the importance of uncertainty along every step of the way, the revivial of policy co-ordination (between countries and institutions) and crucially the macroeconomic policy implications for (re-)distribution. I will be commenting on issues that have to do mostly with Europe. However, since the wolrd is interconnected, inevitably one has to think about the rest of the world and how it affects us.
