The current credit crisis and worldwide policy response have resurrected the reputation of fiscal policy. But the authors contend that it is still widely misunderstood. Many of those who now support fiscal stimulusâsuch as more government spendingâhave a limited view of its usefulness, one...

This paper suggests that Clark's views regarding the Keynesian Revolution illuminate some of the limitations of the Keynesian orthodoxy that developed after the war, bringing more institutional detail and a greater preoccupation with dynamic analysis. Clark developed the multiplier in dynamic...

Changes in labor productivity have been a source of puzzlement and paradoxical results for economists. We suggest that puzzles and paradoxes vanish once two simple regularities are properly acknowledged. Okun and Verdoorn’s Laws explain 87 percent of all the variations in labor productivity....

The justification for inflation targeting rests on three core propositions. The first is called ‘lean against the wind’, which refers to fact that the monetary authority contracts (expands) aggregate demand below capacity when the actual rate of inflation is above (below) target. The second...