Quo Vadis Macroeconomics? Issues, Tensions and Challenges

G. R. Feiwel

Chapter 1 in Issues in Contemporary Macroeconomics and Distribution, 1985, pp 1-100 from Palgrave Macmillan

Abstract: Abstract The ‘classical’ macroeconomic theory that dominated economic thought before Keynes (and is resurfacing at present in a sophisticated guise) viewed the economy as a more or less self-propelled and self-regulating mechanism, where a tendency to establish full employment prevails. The flexibility of wages, prices, and interest rates ensures the operation of the mechanism. In such a system lapses from full employment are transitory and disequilibria are eliminated rapidly and effectively. Full employment is that which is determined by the factors of supply and demand on the market — whatever it may be. Unemployment is thus considered to be merely an accidental and temporary displacement from such a state (see also Sargent, 1979, pp. 44–5).

Keywords: Monetary Policy; Business Cycle; Money Supply; Rational Expectation; Full Employment (search for similar items in EconPapers)
Date: 1985
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DOI: 10.1007/978-1-349-06879-1_1

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