Optimal stabilization policy: A comparison of an orthodox and a heterodox perspective
This essay examines how the choice of theory and model affects the conclusions drawn regarding short run stabilization policy. This is done by comparing the ‘orthodox’ New Neoclassical Synthesis with the ‘heterodox’ post-Keynesian theory as well as their corresponding benchmark-models using scenario analyses. We model both a small and a large shock to autonomous investments and compare the policy
