On the character of macroeconomics, macroeconomic policy and econometrics: the need for another macroeconomic policy conception

Abstract

The work argues that the “traditional” macroeconomic policy conception that emerged in the fifties and sixties was rightly challenged in the seventies, although on the basis of an insufficiently grounded belief in the equilibrating tendencies in market economies. According to the author, the traditional policy conception should be rejected for its misconception of the character of macroeconomics which led to an overly pretentious claim for the possibilities of macroeconomics and macroeconometric model-building in the field of policy. Furthermore, it is argued that the possibility of important deficiencies in the functioning of market economies cannot be precluded on either theoretical or empirical grounds. 

JEL: E60, C01