On Oct. 12, Prof. Jon Faust will be giving the Félix Nuebergh Lecture in Gothenberg, Sweden. The topic will be “The Role of Macroeconomic Policy Analysis in the Great Inflation, Great Moderation and Great Recession.”
Preview: Macroeconomists now see the period since around 1960 as a succession of Greats: the Great Inflation, Great Moderation, and Great Recession. Following the Nobel prize winning analysis of Robert Lucas, many mainstream economists agree that contemporary economic policy analysis contributed mightily to the first of these. As of 2007, at least, mainstream economists were roundly congratulating themselves on the role contemporary analysis played in the second. While the dust has not yet settled on the third Great, opinions at present seem to vary on the role of macroeconomic thinking in the financial crisis and its aftermath.
Professor Jon Faust will question all of these views, and argue that viewing the period since 1960 as three extended “black swan” periods obscures a fundamental flaw in how macroeconomists approached policy analysis throughout the period. He will also make some suggestions for doing better.