In search of lost time: the neoclassical synthesis

Michel De Vroey and Pedro Duarte

The B.E. Journal of Macroeconomics, 2013, vol. 13, issue 1, 965-995

Abstract: Present-day macroeconomics has sometimes been dubbed “the new neoclassical synthesis”, suggesting that it constitutes a reincarnation of the neoclassical synthesis of the 1950s. This paper assesses this understanding. To this end, we examine the contents of the “old” and the “new” neoclassical syntheses. We show that the neoclassical synthesis originally had no fixed content, but two meanings gradually became dominant. First, it designates the program of integrating Keynesian and Walrasian theory. Second, it designates the methodological principle that in macroeconomics it is better to have alternative models geared towards different purposes than a hegemonic general equilibrium model. The paper documents that: (a) the first program was never achieved; (b) Lucas’s criticisms of Keynesian macroeconomics eventually caused the neoclassical synthesis program to vanish from the scene; (c) the rise of DSGE macroeconomics marked the end of the neoclassical synthesis mark II; and (d) contrary to present-day understanding, the link between the old and the new synthesis is at best weak.

Date: 2013
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Related works:
Working Paper: IN SEARCH OF LOST TIME: THE NEOCLASSICALSYNTHESIS (2014)
Working Paper: IN SEARCH OF LOST TIME: THE NEOCLASSICAL SYNTHESIS (2012)
Working Paper: In Search of Lost Time: The Neoclassical Synthesis (2012)
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DOI: 10.1515/bejm-2012-0078

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