Modeling Economic Instability: A History of Early Macroeconomics

This book explores the early history of macroeconomics, examining the macro-dynamic models developed from the late 1920s to the late 1940s and their treatment of economic instability. It highlights the diversity of models representing economic phenomena and the contributions of Jan Tinbergen, Paul Samuelson, and Oskar Lange. The book emphasizes the originality of these models and their relevance to today's model builders and students.

Format: Paperback / softback
Length: 243 pages
Publication date: 02 February 2023
Publisher: Springer Nature Switzerland AG

This book provides a novel approach to the study of the early development of macroeconomics by examining the macro-dynamic models developed between the late 1920s and the late 1940s. It delves into the differences and similarities between the early mathematical business cycle models developed by renowned economists such as Ragnar Frisch, Michal Kalecki, Jan Tinbergen, and others. Through this exploration, it highlights the diverse range of models used to represent economic phenomena, particularly economic crises and instability. Jan Tinbergen, in particular, emerges as one of the most innovative and influential economists of this era, before assuming a prominent leadership role in the macro-econometric movement. His emphasis on economic policy later influenced the work of Paul Samuelson, who, drawing upon Alvin Hansen, aimed to interpret the 1937-1938 recession.

The authors then demonstrate how Samuelson's approach shifted from studying business cycle trajectories to comparing equilibrium points, in response to the critiques of early Keynesian models. In the early 1940s, Samuelson successfully integrated the tools developed by econometricians with the economic content at the heart of the Keynesian revolution. The focus shifted from business cycle trajectories to the disequilibrium between economic aggregates and the challenges associated with global stability of full employment equilibrium. Oskar Lange presented an analysis of market coordination failures, while Lawrence Klein, Samuelson's first Ph.D. student, pursued empirical research to address these issues.

Overall, this book offers a valuable insight into the evolution of macroeconomic theory and its response to economic challenges during the mid-20th century. It sheds light on the contributions of key economists and their contributions to shaping the field of macroeconomics.

Weight: 403g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030903121
Edition number: 1st ed. 2022