New Classical Macroeconomics

Lefteris Tsoulfidis ()

Chapter Chapter 15 in Competing Schools of Economic Thought, 2024, pp 365-382 from Springer

Abstract: Abstract The stagflation that afflicted the US and world economy after the late 1960s shook the economists’ faith in Keynesian economics or Monetarism. The Keynesians could explain the rising price level, as a result of an expansionary fiscal policy; the trouble, however, was the continued and persistent recession (unemployment), which was inconsistent with their theory. Monetarists, on the other hand, could explain the recession through the tight monetary policy; however, this explanation was inconsistent with the rising price level. Thus, the inability of Keynesians and Monetarists to explain the key macroeconomic events of the late 1960s and early 1970s discredited their theories and created the need for alternative explanations.

Keywords: Monetary policy; Business cycle; Rational expectations; Ricardian equivalence; Lucas critique (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Chapter: New Classical Macroeconomics (2009)
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:spr:spshcp:978-3-031-58580-7_15

Ordering information: This item can be ordered from
http://www.springer.com/9783031585807

DOI: 10.1007/978-3-031-58580-7_15

Access Statistics for this chapter

More chapters in Springer Studies in the History of Economic Thought from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().