ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book consists of three essays on issues of relevance for macroeconomic stabilization policy, with emphasis on the value of a distinct national monetary policy. First, it discusses the theory of optimum currency areas (OCAs). Second, it provides the estimates of the output loss associated with disinflation policy, for six small, open OECD economies. Finally, it discusses adjustment to negative, local shocks in Norwegian labor markets. According to Blanchard's text book, the history of modern macroeconomics started in 1936 with the publication of Keynes' General theory of employment, interest, and money. Between the late 1930s and the 1960s, Keynesian ideas became increasingly influential among economic policy makers. The monetarist counter-revolution, of the late 1960s and early 1970s, dampened the optimism with regard to the pursuit of active stabilization policies of the early 1960s.
