SOAS University of London

Department of Development Studies

A Critique of the Theory and Policy of the New Consensus Macroeconomics

Professor Philip Arestis (Department of Land Economy, University of Cambridge, UK)

Date: 20 October 2015Time: 5:00 PM

Finishes: 20 October 2015Time: 7:00 PM

Venue: Russell Square: College Buildings Room: G3

Type of Event: Seminar

This contribution is concerned with the New Consensus Macroeconomics in the case of an open economy. It outlines and explains briefly the main elements and way of thinking about the macroeconomy from the point of view of both its theoretical and policy dimensions. There are a few problems with this particular theoretical framework. We focus in this contribution on a number of important aspects closely related to the New Consensus Macroeconomics. These are: the adoption and incorporation of microfoundations; the adoption of Dynamic Stochastic General Equilibrium models; the absence of banks and monetary aggregates from this theoretical framework; aspects that relate to monetary policy. We discuss under the latter the following aspects: the way the notion of the ‘equilibrium real rate of interest’ is utilised by NCM for monetary policy purposes; the absence of the ‘credit channel’ of monetary policy; the ‘role of ‘animal spirits’; the adoption of the ‘efficient market hypothesis’; and the importance of independent central banks. The analysis is critical of the New Consensus Macroeconomics from a Keynesian perspective.

Professor Philip Arestis is a leading macroeconomist and Director of Research at the Department of Land Economy at the Centre for Economic and Public Policy, University of Cambridge. He is also Professor of Economics at the Department of Applied Economics, University of the Basque Country, Distinguished Adjunct Professor of Economics at the Department of Economics, University of Utah, and Senior Scholar at the Levy Economics Institute in New York. His research interests are in the areas of macroeconomics, monetary economics, applied econometrics and political economy. He has published as sole author or editor, as well as co-author and co-editor, over 70 books and dozens of journal articles. His recent books have included: Financial Stability in the Aftermath of the ‘Great Recession’ (2013), Economic Policies, Governance and the New Economics (2013), Economic and Monetary Union Macroeconomic Policies: Current Practices and Alternatives (2013), Fiscal and Debt Policies for the Future (2014), Finance and the Macroeconomics of Environmental Policies (2015) and Emerging Economies During and After the Great Recession (forthcoming).

This seminar is part of the SOAS Department of Development Studies & Bloomsbury DTC for the Social Sciences seminar series for 2015/2016. To see the full event listing click here.


Organiser: Professor Alfredo Saad-Filho & Dr Feyzi Ismail

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Contact Tel: 020 7898 4504 or 020 7898 4723