From Disequilibrium to Equilibrium Macroeconomics: Barro and Grossman's Trade-off between Rigor and Realism

Romain Plassard

No 2019-17, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: During the 1970s, Keynesian macroeconomics was challenged by the New Classical Economics of Robert Lucas. This involved a battle between disequilibrium and equilibrium macroeconomics. My article contributes to explain why the equilibrium approach came to dominate. My case study is Robert Barro and Herschel Grossman. In 1971, Barro and Grossman elaborated the basic disequilibrium model. In 1976, they wrote the first book on disequilibrium macroeconomics – i.e., Money, Employment, and Inflation. However, at the end of the 1970s, they came to advocate for equilibrium models à la Lucas (1972, 1975). My article traces how and why

Keywords: business cycle; non-neutrality of money; disequilibrium macroeconomics; equilibrium macroeconomics (search for similar items in EconPapers)
JEL-codes: B21 B22 B23 E1 E3 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2019-04
New Economics Papers: this item is included in nep-his, nep-hpe and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2019-17

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