How the Economy Works: Confidence, Crashes and Self-Fulfilling Prophecies

摘要

Roger E. A. Farmer has always been a bold and independent thinker who almost invariably differs from the status quo. He is best known for his work on short-run indeterminacy with Jess Benhabib, done in a variant of a real business cycle model. For that reason, I read with great interest his new book on Macroeconomics, which combines a somewhat idiosyncratic intellectual history of thought with a bold prescription for where Macro theory should be going. In his intellectual history, he provides his own interpretation of Keynes and argues that modern economists, both neoclassical and new-Keynesians, have forsaken the true "Keynes." He then argues that we need to return to something closer to Keynes's original vision, which featured long-run indeterminacy, in order to understand economic fluctuations. Finally, he lays out and argues for a very