Most of the story of this book has been written as if there were just two competing visions of the macroeconomy giving rise to just two ongoing programmes of research interacting with one another. Clearly this is an over-simplification. There are other programmes of research. Despite this it has become customary to explain the evoultion of macroeconomic thought in the 1950s and 1960s as one of conflict between monetarists and Keynesians and important aspects of this division have carried over to the separation of theorists in the 1970s and 1980s into policy passivists and policy activists. Whereas monetarists had argued that monetary policy was more efective than fiscal policy in managing the aggregate levels of demand in an economy, the policy passivists have gone a step further in their insistence that policy is impotent.
KeywordsMonetary Policy Rational Expectation Natural Rate Price Expectation Keynesian Model
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