New Classical Macroeconomics
The new classical macroeconomics (english new classical macroeconomics or new classical economics ) is a mainly by Robert Lucas , Thomas Sargent and Neil Wallace advocated economic theory , the micro-founded Total models based on neoclassical theory developed. One of the essential premises is the theory of rational expectations and constant market clearing. The theory concludes that monetary policyhad no effect on the economy unless monetary policy was unpredictable. While the economic debate in the 1970s was still marked by the controversy between Keynesianism and monetarism, since the 1980s the focus has narrowed to the debate between New Keynesianism and New Classical Macroeconomics.
Basic assumptions
The New Classical Macroeconomics is based on the following premises:
- The assumption of constant market clearing is based on the premise of complete price flexibility.
- Unemployment can exist in the short term due to information costs or the like, but according to this theory, in the medium term it only consists of downwardly inflexible wages ( natural unemployment rate ). Accordingly, there is no such thing as involuntary unemployment.
- According to the theory of rational expectations , it is assumed that economic agents use all available information efficiently.
- Complete neutrality of money : a predictable monetary policy only affects nominal prices and wages, but not the economy, gross domestic product and employment.
- Economic fluctuations can only arise due to incomplete information (decomposition problem), if external shocks or an unpredictable fiscal or monetary policy occur.
Relation to other schools of thought
Some economists see the New Classical Macroeconomics as a modern variant of monetarism , others emphasize that the differences between the New Classical Macroeconomics are greater than the differences between Monetarism and Keynesianism.
The assumption of constant market clearance and the rejection of monetary and fiscal policy is in clear contrast to the neoclassical synthesis and the New Keynesianism , for which monetary policy (and possibly fiscal policy) can be effective in the short term. New Keynesianism, however, took over the theory of rational expectations and the idea of a microeconomic foundation of the total models from the New Classical Macroeconomics.
rating
In theoretical terms, the New Classical Macroeconomics has made a significant contribution to the further development of macroeconomics. The microfoundation of total models based on the assumption of rationally acting actors, but also the introduction of inflation expectations into the models, should be mentioned here. These contributions have flowed into New Keynesianism (New Neoclassical Synthesis).
In practical terms, the models of the theory of real business cycles from the New Classical Macroeconomics are not very suitable for predicting or mapping real business cycles. The New Keynesian models do this better.
Nowadays there is broad consensus, also among economists of the New Classical Macroeconomics, that wages and prices do not adjust as quickly as necessary to restore the equilibrium between supply and demand. The hypothesis of the ineffectiveness of monetary policy is therefore hardly supported nowadays.
Individual evidence
- ↑ a b c New Classical Macroeconomics. In: Gabler Wirtschaftslexikon. Springer Gabler Verlag, accessed on May 10, 2017 .
- ^ Brian Snowden: The New Classical Counter-Revolution: False Path or Illuminating Complement? In: Eastern Economic Journal . tape 33 , no. 4 , 2007, p. 541-562 , JSTOR : 20642377 (English).
- ^ Evan Gilbert, Jonathan Michie: New Classical Macroeconomic Theory and Fiscal Rules: Some Methodological Problems , Oxford Journals, Contributions to Political Economy, Volume 16, Issue 1, pp. 1-21.
- ↑ Bruce C. Greenwald, Joseph E. Stiglitz: Keynesian, New Keynesian, and New Classical Economics , National Bureau of Economic Research , NBER Working Paper No. 2160, February 1987.
- ↑ Kevin Hoover : New Classical Macroeconomics , econlib.org