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6 - Macroeconomics before Microeconomics

A Sceptic’s Guide to Macroeconomics

Published online by Cambridge University Press:  17 February 2022

By
Murray Milgate  and
John Eatwell
Edited by
Enrico Bellino  and
Sebastiano Nerozzi
Enrico Bellino
Affiliation:
Università Cattolica del Sacro Cuore, Milano
Sebastiano Nerozzi
Affiliation:
Università Cattolica del Sacro Cuore, Milano
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Summary

This chapter traces the main currents in the development of macroeconomic thinking over the last seventy years. It adopts a sceptical stance towards the incorporation of Keynes’s theory of effective demand into mainstream thinking and examines the shortcomings of such approaches as they have emerged and developed over time. It pays particular attention to the neoclassical synthesis, the new neoclassical synthesis, general-equilibrium macroeconomics and new classical macroeconomics. It concludes with a brief overview of some potential ways ahead and of their prospects and problems.

Keywords

microfoundationsKeynesimperfectionismgeneral equilibriumDSGEdisequilibriumeffective demandunemploymentSMD theoremmarket clearingneoclassical synthesis.
Type
Chapter
Information
Pasinetti and the Classical Keynesians
Nine Methodological Issues
 , pp. 157 - 186
Publisher: Cambridge University Press
Print publication year: 2022

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