Skip to main content
SpringerLink
Log in

A Critical Appraisal of the New Consensus Macroeconomics

  • Chapter
Microeconomics, Macroeconomics and Economic Policy

Abstract

Malcolm Sawyer has been one of the earliest critics of what we now know as the New Consensus in Macroeconomics (NCM in short). It has been a great privilege to have had the opportunity to work with Malcolm Sawyer all these years, not merely on this aspect of macroeconomics, but also on many others. It is, therefore, a real pleasure to contribute to this particular volume and elaborate further on the vast amount of research that Malcolm Sawyer has successfully undertaken over the years (as, for example, in Sawyer, 2009; see, also, Arestis and Sawyer, 2003, 2004a, 2004b, 2006, 2008a, 2008b).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 54.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Agénor, P. (2002) ‘Monetary policy under flexible exchange rates: An introduction to inflation targeting’, in N. Loayza and N. Soto (eds), Inflation Targeting: Design, Performance, Challenges, Santiago, Chile: Central Bank of Chile.

    Google Scholar 

  • Akerlof, G.A. and Shiller, R.J. (2009) Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism, Princeton, NJ and Oxford: Princeton University Press.

    Google Scholar 

  • Angeriz, A. and Arestis, P. (2007) ‘Monetary policy in the UK’, Cambridge Journal of Economics, 31(6), 863–84.

    Article  Google Scholar 

  • Angeriz, A. and Arestis, P. (2008) ‘Assessing inflation targeting through intervention analysis’, Oxford Economic Papers, 60(2), 293–317.

    Article  Google Scholar 

  • Angeriz, A. and Arestis, P. (2009) ‘The consensus view on interest rates and fiscal policy: Reality or innocent fraud?’, Journal of Post Keynesian Economics, 31(4), 586.

    Article  Google Scholar 

  • Arestis, P. (ed.) (2007a) Is There a New Consensus in Macroeconomics?, Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Arestis, P. (2007b) ‘What is the New Consensus in macroeconomics?’, chapter 2 in P. Arestis (2007a).

    Google Scholar 

  • Arestis, P. (2009) ‘New Consensus Macroeconomics and Keynesian critique’, in E. Hein, T. Niechoj and E. Stockhammer (eds), Macroeconomic Policies on Shaky Foundations: Wither Mainstream Macroeconomics?, Marburg: Metropolis.

    Google Scholar 

  • Arestis, P., Baddeley, M. and Sawyer, M.C. (2007) ‘The relationship between capital stock, unemployment and wages in nine EMU countries’, Bulletin of Economic Research, 59(2), 125–48.

    Article  Google Scholar 

  • Arestis, P. and Chortareas, G. (2008) ‘Atheoretical and theory-based approaches to the natural equilibrium real interest rate’, Eastern Economic Journal, 34(3), 390–405.

    Article  Google Scholar 

  • Arestis, P. and Karakitsos, E. (2009) ‘Subprime mortgage market and current financial crisis’, in P. Arestis, P. Mooslechner and K. Wagner (eds), Housing Market Challenges in Europe and the United States — Any Solutions Available?, Basingstoke: Palgrave Macmillan.

    Chapter  Google Scholar 

  • Arestis, P. and Sawyer, M. (2003) ‘Reinstating fiscal policy’, Journal of Post Keynesian Economics, 26(1), 3–25.

    Google Scholar 

  • Arestis, P. and Sawyer, M. (2004a) Re-examining Monetary and Fiscal Policies in the Twenty First Century, Cheltenham: Edward Elgar Publishing Limited.

    Book  Google Scholar 

  • Arestis, P. and Sawyer, M.C. (2004b) ‘Can monetary policy affect the real economy?’, European Review of Economics and Finance, 3(3), 3–26.

    Google Scholar 

  • Arestis, P. and Sawyer, M. (2006) ‘Fiscal policy matters’, Public Finance, 54(3–4).

    Google Scholar 

  • Arestis, P. and Sawyer, M. (2007) ‘Can the Euro area play a stabilizing role in balancing the global imbalances?’, in J. Bibow and A. Terzi (eds), Euroland and the World Economy: Global Player or Global Drag, Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Arestis, P. and Sawyer, M.C. (2008a) ‘A critical reconsideration of the foundations of monetary policy in the New Consensus Macroeconomics framework’, Cambridge Journal of Economics, 32(5), 761–79.

    Article  Google Scholar 

  • Arestis, P. and Sawyer, M. (2008b) ‘New Consensus Macroeconomics and inflation targeting: Keynesian critique’, Economia e Sociedade, 17, (Special Issue), 629–54.

    Article  Google Scholar 

  • Barro, R.J. (1974) ‘Are government bonds net wealth?’, Journal of Political Economy, 82(6), 1095–117.

    Article  Google Scholar 

  • Blanchard, O.J. (2008) ‘The state of macro’, Working Paper Series No. 08–17, Department of Economics, Massachusetts Institute of Technology, Cambridge, MA, USA.

    Google Scholar 

  • Blanchard, O.J. and Fischer, S. (1989) Lectures on Macroeconomics, Cambridge, MA and London: The MIT Press.

    Google Scholar 

  • Briotti, M.G. (2005) ‘Economic reactions to public finance consolidation: A survey of the literature’, Occasional Paper Series No. 38, Frankfurt: European Central Bank.

    Google Scholar 

  • Buiter, W.H. (2008) ‘Central banks and financial crises’. Paper presented to the Federal Reserve Bank of Kansas City Symposium on Maintaining Stability in a Changing Financial System, Jackson Hole, Wyoming, 21–3 August 2008. Obtainable from: http://www.kc.frb.org/publicat/sympos/2008/Buiter.09.06.08.pdf.

    Google Scholar 

  • Clarida, R., Galí, J. and Gertler, M. (1999) ‘The science of monetary policy: A new Keynesian perspective’, Journal of Economic Literature, 37(4), 1661–707.

    Article  Google Scholar 

  • De Fiore, F. and Tristani, O. (2008) ‘Credit and the natural rate of interest’, ECB Working Paper Series, No. 889, European Central Bank: Frankfurt am Main, Germany.

    Google Scholar 

  • Friedman, B.M. (2003) ‘The LM curve: A not-so-fond farewell’, NBER Working Paper Series, No. 10123, Cambridge, MA: National Bureau of Economic Research.

    Google Scholar 

  • Galí, J. and Gertler, M. (2007) ‘Macroeconomic modelling for monetary policy evaluation’, Journal of Economic Perspectives, 21(4), 25–45.

    Article  Google Scholar 

  • Goodfriend, M. (2007) ‘How the world achieved consensus on monetary policy’, Journal of Economic Perspectives, 21(4), 47–68.

    Article  Google Scholar 

  • Goodfriend, M. and King, R.G. (1997) ‘The new neoclassical synthesis and the role of monetary policy’, in B.S. Bernanke and J.J. Rotemberg (eds), NBER Macroeconomics Annual: 1997, Cambridge, MA: MIT Press.

    Google Scholar 

  • Goodhart, C.A.E. (2004) Review of Interest and Prices by M. Woodford, Journal of Economics, 82(2), 195–200.

    Article  Google Scholar 

  • Goodhart, C.A.E. (2007) ‘Whatever became of the monetary aggregates?’, The Peston Lecture delivered in honour of Maurice, Lord Peston, Queen Mary, University of London, 28 February.

    Google Scholar 

  • Goodhart, C.A.E. (2008) ‘The continuing muddles of monetary theory: A steadfast refusal to face facts’. Paper presented to the 12th Conference ‘Macroeconomic Policies on Shaky Foundations — Wither Mainstream Economics?’ of the Research Network, Macroeconomics and Macroeconomic Policies (RMM), 31 October–1 November.

    Google Scholar 

  • Hemming, R., Kell, M. and Mahfouz, S. (2002) ‘The Effectiveness of Fiscal Policy in Stimulating Economic Activity: A Review of the Literature’, IMF Working Paper 02/208, Washington, DC: International Monetary Fund.

    Google Scholar 

  • Hemming, R., Mahfouz, S. and Schimmelpfennig, A. (2002) ‘Fiscal Policy and Economic Activity in Advanced Economies’, IMF Working Paper 02/87, Washington, DC: International Monetary Fund.

    Google Scholar 

  • Hjelm, G. (2002) ‘Is private consumption higher (lower) during periods of fiscal constructions (expansions)?’, Journal of Macroeconomics, 24(1), 17–39.

    Article  Google Scholar 

  • HM Treasury (2003) Fiscal Stabilisation and EMU, HM Stationery Office, Cmnd 799373, Norwich. Available on www.hm-treasury.gov.uk.

    Google Scholar 

  • Juselius, M. (2008) ‘Testing the new Keynesian model on US and Euro area data’, Economics: The Open-Access, Open-Assessment E-Journal, 2(1), 1–26.

    Google Scholar 

  • Keynes, J.M. (1936) The General Theory of Employment, Interest and Money, London: Macmillan.

    Google Scholar 

  • Orphanides, A. (2007) ‘Taylor rules’, in L. Blum and S. Durlauf (eds), The New Palgrave: A Dictionary of Economics, Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Sawyer, M. (2009) ‘Interest rates and inflation: What are the links?’, Intervention: European Journal of Economics and Economic Policies, 6(1), 81–96.

    Google Scholar 

  • Sawyer, M. (2010) ‘Phillips curve, independence of central banks and inflation targeting’, in G. Fontana, J. McCombie and M. Sawyer (eds), Macroeconomics, Finance and Money: Essays in Honour of Philip Arestis, Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Svensson, L.E.O. (1997) ‘Inflation forecast targeting: Implementing and monitoring inflation targets’, European Economic Review, 41(6), 1111–46.

    Article  Google Scholar 

  • Svensson, L.E.O. (1999) ‘Inflation targeting as a monetary policy rule’, Journal of Monetary Economics, 43(3), 607–54.

    Article  Google Scholar 

  • Taylor, J.B. (1993) ‘Discretion versus policy rules in practice’, Carnegie-Rochester Conference Series on Public Policy, December, 195–214.

    Google Scholar 

  • Taylor, J.B. (1999) ‘A historical analysis of monetary policy rules’, in J.B. Taylor (ed.), Monetary Policy Rules, Chicago: Chicago University Press.

    Chapter  Google Scholar 

  • Taylor, J.B. (2001) ‘The role of the exchange rate in monetary-policy rules’, American Economic Review, 91(2), 263–7.

    Article  Google Scholar 

  • Van Aarle, B. and Garretsen, H. (2003) ‘Keynesian, non-Keynesian or no effects of fiscal policy changes? The EMU case’, Journal of Macroeconomics, 25(2), 213–40.

    Article  Google Scholar 

  • Wadhwani, S. (2008) ‘Should monetary policy respond to asset price bubbles? Revisiting the debate’, National Institute Economic Review, No. 206, 25–34.

    Google Scholar 

  • Weber, A., Lemke, W. and Worms, A. (2008) ‘How useful is the concept of the natural real rate of interest for monetary policy?’, Cambridge Journal of Economics, 32(1), 49–63.

    Article  Google Scholar 

  • Wicksell, K. (1898) Geldzins und Güterpreise, Frankfurt: Verlag Gustav Fischer. English translation in R.F. Kahn (1965), Interest and Prices, New York: Kelley.

    Google Scholar 

  • Woodford, M. (2003) Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Woodford, M. (2007) ‘The case for forecast targeting as a monetary policy strategy’, Journal of Economic Perspectives, 21(4), 3–24.

    Article  Google Scholar 

  • Woodford, M. (2008) ‘How important is money in the conduct of monetary policy?’, Journal of Money, Credit and Banking, 40(8), 1561–98.

    Article  Google Scholar 

  • Woodford, M. (2009) ‘Convergence in macroeconomics: Elements of the new synthesis’, American Journal of Economics — Macroeconomics, 1(1), 267–79.

    Article  Google Scholar 

  • Wren-Lewis, S. (2000) ‘The limits to discretionary fiscal stabilisation policy’, Oxford Review of Economic Policy, 16, 92–105.

    Article  Google Scholar 

Download references

Authors
  1. Philip Arestis
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of Cambridge, UK

    Philip Arestis

  2. University of the Basque Country, Spain

    Philip Arestis

Copyright information

© 2011 Philip Arestis

About this chapter

Cite this chapter

Arestis, P. (2011). A Critical Appraisal of the New Consensus Macroeconomics. In: Arestis, P. (eds) Microeconomics, Macroeconomics and Economic Policy. Palgrave Macmillan, London. https://doi.org/10.1057/9780230313750_6

Download citation

Publish with us

Policies and ethics

Search

Navigation