Memorandum,
Oslo University, Department of Economics

Abstract: The recent great financial crisis and the ensuing deep recessions have placed in sharp relief the fundamental issue of how financial factors, including financial instability, interact with the real economy. In order to understand the nature of these interactions and formulate policies that would help contain adverse outcomes it is essential to have an adequate conceptual framework. Unfortunately, the standard DSGE approach is deficient in this regard. This paper contends that Haavelmo’s macroeconomic theorizing provides a better starting point for forging the required integration between the financial and real sectors. The paper extends the basic Haavelmo model to the contemporary scene and uses it to shed light on policy solutions to the current predicament.

Keywords: financial crisis; investment; monetary and fiscal policies

JEL-codes: E22; E44; E52; E63

34 pages, February 27, 2012

Full text files

Memo-06-2012.pdf  

Download statistics

• Oslo University, Department of Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Mari Strønstad Øverås ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:osloec:2012_006This page generated on 2024-09-13 22:16:45.