Abstract
Finn Kydland’s contributions to economics science have changed the terms of the debate in two important and related counts: the theory of policymaking and of business cycles. In his Ph.D. dissertation, Finn showed that a complex ‘credibility problem’, inherent to the policymaking process, prevented the evaluation of economic policies with the optimal control theory techniques applied until then. His work with Edward Prescott on business cycles identified supply shocks as one of the primary causes of economic fluctuations, with the counter-intuitive and therefore resisted implication that the perfect smoothing of the business cycle may not be a sensible policy objective.
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Zarazaga, C.E.J.M. (2018). Kydland, Finn Erling (1943–). In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2436
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2436
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