Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217007 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8256
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Macroeconomic theory has developed into increasingly sophisticated mathematical models. In the words of Mankiw, macroeconomics has developed from engineering into science. The Global Financial Crisis (GFC) revealed that the empirical relevance and the usefulness of these models is debatable. Why has this occurred? Who have been the key players in this development? What have been the policy implications of this development? This paper addresses these points by providing an overview of the development of macroeconomic theory over the past 40 years. The focus is on the main lines of thinking and the story behind the models more so than on the mathematical details of these models. I argue that crises have been the main driver of changes in macroeconomic theory and that the current debates after the GFC will be the start of a more plural approach to macroeconomics, in which engineers will regain their place.
Subjects: 
macroeconomic theory
Keynes
Friedman
Lucas
JEL: 
B22
E12
E60
Document Type: 
Working Paper
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