The new-classical contribution to macroeconomics

Abstract

This work is devoted to assessing New-Classical ideas, and to asking what of lasting importance this school of macroeconomics has contributed since the early 1970s. It deals in turn with the relationship between New-Classical Economics and Monetarism, the relative explanatory power of these two bodies of doctrine over empirical evidence, and the claims of New-Classical Economics to embody a superior analytic method. The author argues that, although the particular ways in which New-Classical Macroeconomics has applied its basic ideas are unnecessarily restrictive, its stress on equilibrium behaviour conditioned by the state of individual agents’ expectations as a basis for macro modelling is nevertheless valuable.