Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90749
Authors: 
Chand, Sheetal K.
Year of Publication: 
2012
Series/Report no.: 
Memorandum, Department of Economics, University of Oslo 06/2012
Abstract: 
The recent great financial crisis and the ensuing deep recessions have placed in sharp relief the fundamental issue of how financial factors, including financial instability, interact with the real economy. In order to understand the nature of these interactions and formulate policies that would help contain adverse outcomes it is essential to have an adequate conceptual framework. Unfortunately, the standard DSGE approach is deficient in this regard. This paper contends that Haavelmo‟s macroeconomic theorizing provides a better starting point for forging the required integration between the financial and real sectors. The paper extends the basic Haavelmo model to the contemporary scene and uses it to shed light on policy solutions to the current predicament.
Subjects: 
financial crisis
investment
monetary and fiscal policies
JEL: 
E22
E44
E52
E63
Document Type: 
Working Paper

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