Introduction - A Brief Review of Modern Macroeconomic...

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A Brief Review of Modern Macroeconomic Framework Ke Pang Wilfrid Laurier University Ke Pang (WLU) Modern Macroeconomic Framework EC640 1 / 6
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Traditional Keynesian approach to macroeconomics is based on ad hoc (stylized) assumptions about the relations between macroeconomic aggregates. I simple, useful at one point, but not enough I partial equilibrium framework I e.g., IS-LM Ke Pang (WLU) Modern Macroeconomic Framework EC640 2 / 6
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Modern macroeconomics seeks to explain the aggregate economy using frameworks with strong microeconomic foundations. I The economy is portrayed as a dynamic general equilibrium system that reflects the collective decisions of rational individuals. I These individual decisions are then coordinated through markets to produce the macroeconomy. I The economy is viewed as being in continuous equilibrium: given the information available, agents make decisions that appear to be optimal for them. F
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Introduction - A Brief Review of Modern Macroeconomic...

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