Irrational Expectations, Unclearing Markets and a Business Cycle That Won't Go Away: The Recent School of New Classical Economists Comes a Cropper on Basic Economic Facts

Dipendra Sinha

American Journal of Economics and Sociology, 1988, vol. 47, issue 3, 345-354

Abstract: Abstract. The assumptions and conclusions of New Classical Macroeconomics (NCM) are critically examined. NCM grew out of the alleged failure of the Keynesian school to deal with the problems of stagflation of the 1970s. The two fundamental ideas of the NCM are the rational expectations hypothesis and the theory of instantaneous market clearing. According to the NCM, fiscal and monetary policies will achieve desired results if they are unanticipated. Business cycles are thought to be results of imperfect information on the part of rational agents (people). The NCM has been severely criticized by such prominent economists as Arrow, Tobin and Thurow.

Date: 1988
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/j.1536-7150.1988.tb02051.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ajecsc:v:47:y:1988:i:3:p:345-354

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0002-9246

Access Statistics for this article

American Journal of Economics and Sociology is currently edited by Laurence S. Moss

More articles in American Journal of Economics and Sociology from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().