Macroeconomics

and Banking 25 (May 1993): 151–162. For a study that questions the link between inflation and

central-bank independence, see Marta Campillo and Jeffrey A. Miron, “Why Does Inflation Differ

Across Countries?” in Christina D. Romer and David H. Romer, eds., Reducing Inflation: Motivation

and Strategy (Chicago: University of Chicago Press, 1997), 335–362.

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P A R T   V

Macroeconomic Policy Debates

15-3

Conclusion: Making Policy 

in an Uncertain World

In this chapter we have examined whether policy should take an active or passive

role in responding to economic fluctuations and whether policy should be con-

ducted by rule or by discretion. There are many arguments on both sides of these

questions. Perhaps the only clear conclusion is that there is no simple and com-

pelling case for any particular view of macroeconomic policy. In the end, you must

weigh the various arguments, both economic and political, and decide for yourself

what kind of role the government should play in trying to stabilize the economy.

For better or worse, economists play a key role in the formulation of eco-

nomic policy. Because the economy is complex, this role is often difficult. Yet it

is also inevitable. Economists cannot sit back and wait until our knowledge of

the economy has been perfected before giving advice. In the meantime, some-

one must advise economic policymakers. That job, difficult as it sometimes is,

falls to economists.

The role of economists in the policymaking process goes beyond giving

advice to policymakers. Even economists cloistered in academia influence poli-

cy indirectly through their research and writing. In the conclusion of The Gen-

eral Theory, John Maynard Keynes wrote: