Banking in macroeconomic theory and policy

This special issue, “Banking in Macroeconomic Theory and Policy,”explores a problem that has occupied to varying degrees several recent generations of economists: identify- ing and integrating the appropriate role of a banking sector within a policy-relevant an- alytical framework of macroeconomic analysis. This introductory article tries to provide a context for the fascinating contributions to this issue. It reviews efforts to apply develop- ments in bank modeling to augmenting macroeconomic models during the 1960s through 1980s, theoretical and empirical elements that led to diminished emphasis on incorporat- ing banking into analytical macroeconomic frameworks between the 1990s and the 2007–2009 financial crisis, and recently renewed work to integrate banking sectors into modern macroeconomic models. The paper concludes by reviewing briefly the contributions con- tained in this special issue.