School of Economics

2010 Discussion Papers

School of Economics Discussion Paper 10/12
December 2010

The Financial Crisis:
What have macroeconomists learnt?

Jagjit S. Chadha
University of Kent


I outline a simple roadmap for work in micro-founded models. Rather than abandoning the route to further micro-foundations and returning to ad hoc economics, the techniques we have used over the past two decades to develop micro-founded business cycle models will allow us to develop models with meaningful financial frictions and thus address once again the question of monetary and fiscal policies with active rather then passive financial sectors. Macroeconomics and finance are likely to remain bound together.

JEL Classification: E42, E52, E58

Keywords: Future of macroeconomics, DSGE models, crisis

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