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Towards a «New NeoClassical Synthesis»? An Analysis of the Methodological Convergence between New Keynesian Economics and Real Business Cycle Theory

Abdallah Zouache

History of Economic Ideas, 2004, vol. 12, issue 1, 95-117

Abstract: This paper discusses the emergence of a New NeoClassical Synthesis in macroeconomics. It shows that the New NeoClassical Synthesis is the result of the methodological convergence that has occurred between New Keynesian Economics and Real Business Cycle theory. As a result of this convergence, the New NeoClassical Synthesis appears as an extension of the methodology of Real Business Cycle theory. This consensus is illustrated with regard to the analysis of unemployment. An agreement has emerged between New Keynesian Economics and Real Business Cycle theory to abandon the concept of involuntary unemployment in order to focus on the study of the impact of frictional unemployment on employment dynamics.

Date: 2004
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Handle: RePEc:hid:journl:v:12:y:2004:1:4:p:95-117