I argue which the macroeconomic ideas of academics that on a previous occasion the implications of the and researchers get translated (or do not get consensus New Keynesian model were ignored, translated) into macroeconomic policy, and is and that was in setting up the fiscal architecture described in general terms in the first section of of the Eurozone. [...] Even if the policy maker would like to be Great Depression, the inflation of the 1970s, the benevolent, the policy intermediary may want to recent financial crisis, and finally the slow recov- ‘sell their product’ and so will select ideas that ery from that crisis, which included the second pander to the policymakers’ prejudices rather Eurozone recession. [...] A policy intermediaries in any of these cases? policy maker who, if they had to assess what In the case of the Great Depression, the sim- the academic consensus was themselves might ple view that I mentioned earlier that this crisis well be swayed by it, fails to do so as a result of stemmed from a basic lack of the appropriate the existence of intermediaries. [...] As In the case of the recent financial crisis, it is a result, policy in the major economies moved argued that macroeconomics failed to adequately towards fiscal austerity, and as a result by 2013 model the many imperfections in the financial resources in the Eurozone worth at least 10% of sector, and as a result failed to predict the crisis GDP were lost. [...] Some of the roots of that crisis lay in the Eurozone’s fis- cal policy architecture, which ignored the well understood role that countercyclical fiscal policy at the national level could play in offsetting the MANY OF THE impact of asymmetric shocks.
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