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The Two Triangles: what did Wicksell and Keynes know about macroeconomics that modern economists do not (consider)?

Author

Listed:
  • Ronny Mazzocchi
  • Roberto Tamborini
  • Hans-Michael Trautwein
Abstract
The current consensus in macroeconomics, as represented by the New Neoclassical Synthesis, is to work within frameworks that combine intertemporal optimization, imperfect competition and sticky prices. We contrast this �NNS triangle� with a model in the spirit of Wicksell and Keynes that sets the focus on interest-rate misalignments as problems of intertemporal coordination of consumption and production plans in imperfect capital markets. We show that, with minimal deviations from the standard perfect competition model, a model structure can be derived that looks similar to the NNS triangle, but yields substantially different conclusions with regard to the dynamics of inflation and output gaps and to the design of the appropriate rule for monetary policy.

Suggested Citation

  • Ronny Mazzocchi & Roberto Tamborini & Hans-Michael Trautwein, 2009. "The Two Triangles: what did Wicksell and Keynes know about macroeconomics that modern economists do not (consider)?," Department of Economics Working Papers 0906, Department of Economics, University of Trento, Italia.
    • Handle: RePEc:trn:utwpde:0906
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    File URL: http://www.unitn.it/files/06_09_tamborini.pdf
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    References listed on IDEAS

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    18. repec:bla:intfin:v:5:y:2002:i:2:p:165-91 is not listed on IDEAS
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    22. Roberto Tamborini, 2006. "Back to Wicksell? In search of the foundations of practical monetary policy," Department of Economics Working Papers 0602, Department of Economics, University of Trento, Italia.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. A summary of the recent DSGE discussion @ Bruegel
      by Dirk in econoblog101 on 2014-01-22 18:49:14

    Citations

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    Cited by:

    1. Jean-Luc Gaffard, 2014. "Crise de la théorie et crise de la politique économique. Des modèles d'équilibre général stochastique aux modèles de dynamique hors de l'équilibre," Revue économique, Presses de Sciences-Po, vol. 65(1), pages 71-96.
    2. Heinz D. Kurz, 2011. "Vom Fall und Wiederaufstieg einiger Ideen von Lord Keynes oder: Zum trostlosen Zustand einer "elenden Wissenschaft"," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 37(1), pages 15-36.
    3. repec:hal:spmain:info:hdl:2441/c6t1fl36hv9s7q89j8m3l00al is not listed on IDEAS
    4. Roberto Tamborini, 2010. "The Macroeconomics of Imperfect Capital Markets: Whither Saving-Investment Imbalances?," Contributions to Economics, in: Giorgio Calcagnini & Enrico Saltari (ed.), The Economics of Imperfect Markets, chapter 0, pages 137-166, Springer.
    5. Alexander Tobon & Nicolas Barbaroux, 2015. "Credit and Prices in Woodford's New Neoclassical Synthesis," Economic Thought, World Economics Association, vol. 4(1), pages 21-46, March.
    6. Ronny Mazzocchi, 2013. "Scope and Flaws of the New Neoclassical Synthesis," DEM Discussion Papers 2013/13, Department of Economics and Management.
    7. repec:clr:wugarc:y:2011:v:37i:1p:15 is not listed on IDEAS
    8. Ronny Mazzocchi, 2013. "Investment-Saving Imbalances with Endogenous Capital Stock," DEM Discussion Papers 2013/14, Department of Economics and Management.
    9. J.E. King, 2010. "Reflections on the Global Financial Crisis," Chapters, in: Steven Kates (ed.), Macroeconomic Theory and its Failings, chapter 9, Edward Elgar Publishing.
    10. repec:spo:wpecon:info:hdl:2441/c6t1fl36hv9s7q89j8m3l00al is not listed on IDEAS
    11. Elisabetta De Antoni, 2009. "Money and finance: the heterodox views of R. Clower, A. Leijonhufvud and H. Minsky," Department of Economics Working Papers 0908, Department of Economics, University of Trento, Italia.
    12. repec:hal:wpspec:info:hdl:2441/c6t1fl36hv9s7q89j8m3l00al is not listed on IDEAS
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    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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