samlet årgang - Økonomisk Institut - Københavns Universitet

316
ters, and a comprehensive coverage of all the
topics which one would expect to find in a
complete macroeconomics course.
The sub-title indicates the organisation of
the book. It is divided into two halves. Book 1
deals with »The Long Run«, and consists of 9
chapters on growth and 3 on structural unemployment,
while Book 2 deals with »The
Short Run« and consists of 9 chapters on the
closed economy and 4 on the open economy.
The inclusion of structural unemployment
alongside growth as part of »The Long Run«
should help students to appreciate better this
fundamental division within macroeconomics,
something which is not clear to many
undergraduates: that is, the division between
models which are concerned with trends
rather than cycles and in which only real
factors matter, and models which are concerned
with fluctuations about the trend and in
which monetary factors and nominal rigidities
play a key role. Nevertheless, the fact that it is
possible to devote as much as half the book to
»The Long Run« is a sign of how important
the subject of growth has become in contemporary
macroeconomics. Not long ago
growth would quite commonly have been the
last chapter out of 10 in an undergraduate
macro text. In SWJ growth not only comes
first (the new orthodoxy in macro textbook
layout), but also takes up more than one third
of the book.
Another distinctive feature of SWJ’s
approach is the attempt to cover all the usual
topics in macroeconomics using a minimum
number of different models. It is true that
macroeconomics, to a much greater extent
than microeconomics, often appears to students
to consist of a huge variety of models,
each using specialised assumptions in order
to address the issue at hand, with no apparent
consistency of approach. This makes it hard
for students to understand how the different
models and issues are related. SWJ aim to
overcome this by using as few models as possible
and by preserving the maximum number
of common elements between them. Of
course, there are underlying reasons for this
NATIONALØKONOMISK TIDSSKRIFT 2005. NR. 2
tendency to variety which relate to the nature
of macroeconomics as a subject. It is not just
due to self-indulgence or intellectual untidiness
on the part of macroeconomists. Macroeconomics
by definition has to deal with the
whole economy – with a general equilibrium
system – so that macroeconomists have in
principle to model more of the economy than
microeconomists. There are certain elements
which they cannot leave out or else their
models would be mere partial equilibrium
models. This extra burden means that sacrifices
have to be made somewhere in order for
the analysis not to be overwhelmed by complexity.
It hence results in shortcuts being
taken with parts of the model, with different
shortcuts being adopted depending on the
particular macroeconomic phenomenon one
is trying to study. It is largely from this that
the »non-nested« nature of so many macromodels
stems. The potential cost, then, of
trying to achieve model consistency across
different topics is that the model may become
unnecessarily cumbersome for the modelling
task in hand.
Do SWJ avoid this cost? The answer is
that they make a very good attempt to avoid
it. As a test of how well they succeed, consider
their treatment of the AD-AS model.
Some version of AD-AS lies at the heart of
most undergraduate macroeconomics texts.
For their baseline model, SWJ choose a setup
in which short-run nominal rigidity arises
from money wages being set one period in advance.
Inflation expectations, on which wage
setting is based, are modelled as »static«: that
is, equal to the lagged value of actual inflation
(at least, in the closed economy; SWJ use a
slightly different assumption in the open economy).
Such a choice means that the majority
of the short-run analysis is therefore based on
»backward-looking«, »non-rational«, expectations.
It further means that – since SWJ
analyse the dynamic implications of all
their models thoroughly – the dynamics (of
the closed-economy model, anyway) are
completely driven by the static expections
assumption. Possibly rather too much there-