Re: Questions about the stagflation episode...

[Alex Tabarrok]

I think that today there is a unified macro (Bill recognized that saying there wasn't was going out on a limb). Macro is now in a period of "normal science." The profession has decided that the corect way to do macro is using a stochastic dynamic general equilibrium model. Some people include sticky prices in such models and others do not but either approach is well within the mainstream. Also, almost all the profession will now also agree that sticky prices or not a large fraction of what we call business cycles are the natural responses of an economy to real shocks.
Although stagflation opened the door to new ideas what has driven the process more than anything is the internal dynamic to make macro models more micro-based.

Alex
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Alexander Tabarrok Department of Economics, MSN 1D3 George Mason University Fairfax, VA, 22030 Tel. 703-993-2314

Web Page: http://mason.gmu.edu/~atabarro/
and
Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621 Tel. 510-632-1366