Data and Code for: The Evolving Core of Usable Macroeconomics for Policymakers
Principal Investigator(s): View help for Principal Investigator(s) Alessandro Villa, Federal Reserve Bank of Chicago; Jonas Fisher, Federal Reserve Bank of Chicago; Bart Hobijn, Federal Reserve Bank of Chicago
Version: View help for Version V1
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Project Citation:
Villa, Alessandro, Fisher, Jonas , and Hobijn, Bart. Data and Code for: The Evolving Core of Usable Macroeconomics for Policymakers. Nashville, TN: American Economic Association [publisher], 2025. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-05-27. https://doi.org/10.3886/E226863V1
Project Description
Summary:
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We provide a brief primer on how the core of usable macroeconomic theory for monetary policymakers has evolved over the past 50 years. Today’s policy discussions center on the New Keynesian (NK) synthesis, which builds on the Neoclassical growth model and the AS-AD framework. It incorporates nominal and real rigidities, financial and labor market frictions, the importance of expectations, and inspired terms used by policymakers such as “anchored inflation expectations” and “forward guidance.” While essential for communication during the Great Recession and COVID-19 pandemic, these events also revealed the NK model's limitations. Newer models incorporating heterogeneous agents potentially offer richer policy insights but add complexity and the challenge of distilling their main policy implications going forward.
Scope of Project
Subject Terms:
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History of economic thought;
monetary policy
JEL Classification:
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B22 History of Economic Thought: Macroeconomics
E50 Monetary Policy, Central Banking, and the Supply of Money and Credit: General
B22 History of Economic Thought: Macroeconomics
E50 Monetary Policy, Central Banking, and the Supply of Money and Credit: General
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