Stagflation and the Rejection of Keynesian Economics: A Case of Naive Falsification

Jesse Zinn

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper I employ Imre Lakatos's methodology of scientific research programs to scrutinize the idea that stagflation in the 1970s falsified the Keynesian research program. I point out that Keynesian models were able to account for stagflation once they included inflation expectations, so the essential tenets of the Keynesian research program are consistent with the would-be anomaly of stagflation. Furthermore, Keynesian economics exhibited both theoretical and empirical progress by evolving in a way that rendered stagflation a logical consequence of Keynesian assumptions. The transition to new classical economics did not yield such progress. Also, as Keynesian economics tends to adopt novel findings and research methods, new classical economics does not have excess theoretical or empirical content relative to the Keynesian research program. In summary, I find that the falsification of the Keynesian program is unwarranted.

Keywords: Keynesian Economics; New Classical Economics; Monetarism; Scientific Revolutions; Scientific Research Programs; Imre Lakatos (search for similar items in EconPapers)
JEL-codes: B22 B41 (search for similar items in EconPapers)
Date: 2013-10-09
New Economics Papers: this item is included in nep-hpe and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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