Pierre-Yves Hénin - Böcker

Building from the micro-foundations of economic behaviour to a full survey of macroeconomics, the book examines growth theory and equilibrium and disequilibrium approaches to provide a comprehensive survey of all the rival theoretical approaches that underlie central policy debates. A survey of pre-Keynesian theories of growth, fluctuations and the various short and long cycles and crises is followed by an exposition of Keynesian theory and its subsequent development and of the neo-classical revival. Topics covered include:* Non-clearing markets* Involuntary unemployment* Persistent inflation.As well as full coverage of the English-language literature, Macrodynamics covers important contributions from the new school of French macroeconomists, including Malinvaud, Benassy and Grandmont.

Building from the micro-foundations of economic behaviour to a full survey of macroeconomics, the book examines growth theory and equilibrium and disequilibrium approaches to provide a comprehensive survey of all the rival theoretical approaches that underlie central policy debates. A survey of pre-Keynesian theories of growth, fluctuations and the various short and long cycles and crises is followed by an exposition of Keynesian theory and its subsequent development and of the neo-classical revival. Topics covered include:* Non-clearing markets* Involuntary unemployment* Persistent inflation.As well as full coverage of the English-language literature, Macrodynamics covers important contributions from the new school of French macroeconomists, including Malinvaud, Benassy and Grandmont.

The future of built-in stabilizers is currently a matter of concern due to the various challenges arising from the processes of fiscal consolidation, international integration and the reflux from the welfare state. This text gathers relevant material for assessing the issue from both theoretical and empirical research. This volume describes the stabilization properties of fiscal policies on business cycles and growth within dynamic equilibrium models. It also gives attention to automatic stabilization within an economic union. Both the loss of control over monetary policy and the restraints on the use of fiscal policy for countries entering the EMU are sources of concern about the possibilities of stabilizing fluctuations affecting the members of the Union. Furthermore, attention is given to stabilization and labour market policies. The contribution of labor market institutions to automatic stabilizers is often advocated. Post World War II institutions have brought protection to employment, wages and unemployed substitution revenues which involve stabilization of actual income.Recent institutional changes towards more labor market flexibility, mainly motivated by efficiency purposes, may be costly in terms of stabilization. The final part is on empirical evidence, recent trends and problems in stabilization. It is devoted to empirical studies of the stabilization effect of alternative fiscal policies, emphasizing the experience of European countries in the 1990s.

Setting the issue "Most economists consider the marked increase in automatic stabilizers a highly favorable development with respect to maintenance of economic stability". Besides the rare privilege of having being signed by both Milton Friedman and Paul Samuelson (Depres,Friedman, Hart, Samuelson, and Wallace [1950]), among others, this sentence expressed as soon as 1950 the consensus view on the stabilizing effect of fiscal rules governing tax revenue and public expendi­ tures and transfers. This positive ex ante assessment will have been confirmed ex post as part of the explanation for post war stabilization (Burns [1960], de Long and Summers [1986], Moore and Zarnovitz [1986]). However, it becomes disputed in both its positive and normative aspects. Many institutional changes since the eighties point at curbing back the transfer mechanisms underlying automatic stabilizers, and legal restraints on deficits such as the US balanced budget amendment or the European Maastricht criteria would involve serious risks for the future of stabilizers. Under such rules "the government would become, almost inevitally, a destabilizer rather than a stabilizer" said Joseph Stiglitz, quoted by the New York Times (April 1995)). "Built-in stabilizers are automatic fiscal adjustments that reduce the national income multiplier and thus cushion the effects of changes in autonomous spend­ ing on the level of income" (Pechman [1987]). Early analyses of the automatic fiscal stabilizers include the contributions of A. G. Hart [1945], R. Musgrave and M. Miller (1948) and E. C. Brown (1955).

Models derived from the Real Business Cycle perspective have recently taken a major place in business cycle research. The papers in this present volume bring three contributions to this research programme: A critical evaluation of the canonical RBC models, new elements of empirical relevance, based on comparative calibration and testing, and new specifications, at the frontier of business cycle research, coping with non walrasian features, contracts and nominal rigidities, unemployment and growth.