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New Neoclassical Synthesis
The new neoclassical synthesis (NNS), which is now generally referred to as New Keynesian economics, and occasionally as the New Consensus, is the fusion of the major, modern macroeconomic schools of thought – new classical macroeconomics/real business cycle theory and early New Keynesian economics – into a consensus view on the best way to explain short-run fluctuations in the economy. This new synthesis is analogous to the neoclassical synthesis that combined neoclassical economics with Keynesian macroeconomics. The new synthesis provides the theoretical foundation for much of contemporary mainstream macroeconomics. It is an important part of the theoretical foundation for the work done by the Federal Reserve and many other central banks. Prior to the synthesis, macroeconomics was split between partial-equilibrium New Keynesian work on market imperfections demonstrated with small models and new classical work on real business cycle theory that used fully specified general ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Macroeconomic
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and government spending to regulate an economy's growth and stability. This includes regional, national, and global economies. According to a 2018 assessment by economists Emi Nakamura and Jón Steinsson, economic "evidence regarding the consequences of different macroeconomic policies is still highly imperfect and open to serious criticism." Macroeconomists study topics such as GDP (Gross Domestic Product), unemployment (including unemployment rates), national income, price indices, output, consumption, inflation, saving, investment, energy, international trade, and international finance. Macroeconomics and microeconomics are the two most general fields in economics. The United Nations Sustainable Development Goal 17 has a target to enha ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Ellen McGrattan
Ellen McGrattan is an American macroeconomist who is Professor of Economics at the University of Minnesota and past director of the Heller-Hurwicz Economics Institute, and consults for the Federal Reserve Bank of Minneapolis. McGrattan's professional honors include being a research associate at the National Bureau of Economic Research, a Fellow of the Econometric Society, a Fellow of the Society for the Advancement of Economic Theory. She is a member of the Bureau of Economic Analysis Advisory Committee, and the Minnesota Population Center Advisory Board, and formerly served as president of the Midwest Economics Association. Education McGrattan received a Bachelor of Science in economics and mathematics from Boston College, followed by a Ph.D. in economics from Stanford University in 1989. McGrattan has taught courses at Duke University, the European University Institute, the Stockholm School of Economics, the University of California, Los Angeles, the University of Pennsylvan ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
History Of Macroeconomic Thought
Macroeconomic theory has its origins in the study of business cycles and monetary theory. In general, early theorists believed monetary factors could not affect real factors such as real output. John Maynard Keynes attacked some of these "classical" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions, he noticed the tendency for people and businesses to hoard cash and avoid investment during a recession. He argued that this invalidated the assumptions of classical economists who thought that markets always clear, leaving no surplus of goods and no willing labor left idle. The generation of economists that followed Keynes synthesized his theory with neoclassical microeconomics to form the neoclassical synthesis. Although Keynesian theory originally omitted an explanation of price levels and inflation, later Keynesians adopted the Phillips cur ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
New Keynesian Macroeconomics
New Keynesian economics is a school of macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics. Two main assumptions define the New Keynesian approach to macroeconomics. Like the New Classical approach, New Keynesian macroeconomic analysis usually assumes that households and firms have rational expectations. However, the two schools differ in that New Keynesian analysis usually assumes a variety of market failures. In particular, New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions. Wage and price stickiness, and the other market failures present in New Keynesian models, imply that the economy may fail to attain full employment. Therefore, New Keynesians ar ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
New Classical Macroeconomics
New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical economics, neoclassical framework. Specifically, it emphasizes the importance of rigorous foundations based on microeconomics, especially rational expectations. New classical macroeconomics strives to provide neoclassical microeconomic foundations for macroeconomic analysis. This is in contrast with its rival New Keynesian economics, new Keynesian school that uses microfoundations such as Sticky (economics), price stickiness and imperfect competition to generate macroeconomic models similar to earlier, Keynesian ones. History Classical economics is the term used for the first modern school of economics. The publication of Adam Smith's ''The Wealth of Nations'' in 1776 is considered to be the birth of the school. Perhaps the central idea behind it is on the ability of the market to be self-correcting as well a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Neoclassical Synthesis
The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a neoclassical economics academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes in his book ''The General Theory of Employment, Interest and Money'' (1936). It was formulated most notably by John Hicks (1937), Franco Modigliani (1944), and Paul Samuelson (1948), who dominated economics in the post-war period and formed the mainstream of macroeconomic thought in the 1950s, 60s, and 70s. A series of developments occurred that shook the neoclassical synthesis in the 1970s as the advent of stagflation and the work of monetarists like Milton Friedman cast doubt on neo-Keynesian conceptions of monetary theory. The conditions of the period proved the impossibility of maintaining sustainable growth and low level of inflation via the measures suggested by the school. The result would be a series of new ideas to bring tool ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Potential Output
In economics, potential output (also referred to as "natural gross domestic product") refers to the highest level of real gross domestic product (potential output) that can be sustained over the long term. Actual output happens in real life while potential output shows the level that could be achieved. Limits to output Natural (physical, etc) and institutional constraints impose limits to growth. If actual GDP rises and stays above potential output, then, in a free market economy (i.e. in the absence of wage and price controls), inflation tends to increase as demand for factors of production exceeds supply. This is because of the finite supply of workers and their time, of capital equipment, and of natural resources, along with the limits of our technology and our management skills. Graphically, the expansion of output beyond the natural limit can be seen as a shift of production volume above the optimum quantity on the average cost curve. Likewise, if GDP persists below natural G ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Output Gap
The GDP gap or the output gap is the difference between actual GDP or actual output and potential GDP, in an attempt to identify the current economic position over the business cycle. The measure of output gap is largely used in macroeconomic policy (in particular in the context of EU fiscal rules compliance). The GDP gap is a highly criticized notion, in particular due to the fact that the potential GDP is not an observable variable, it is instead often derived from past GDP data, which could lead to systemic downward biases."True, the output gap is an elusive concept that should never have become a gauge for conducting public policy, and it may be larger than thought."Monetary policy: lifting the veil of effectivenes Speech by Benoit Cœuré, 18 December 2019 Calculation The calculation for the output gap is Y–Y* where Y is actual output and Y* is potential output. If this calculation yields a positive number it is called an inflationary gap and indicates the growth of ag ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Lucas Critique
The Lucas critique, named for American economist Robert Lucas's work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data. More formally, it states that the decision rules of Keynesian models—such as the consumption function—cannot be considered as structural in the sense of being invariant with respect to changes in government policy variables. The Lucas critique is significant in the history of economic thought as a representative of the paradigm shift that occurred in macroeconomic theory in the 1970s towards attempts at establishing micro-foundations. Thesis The basic idea pre-dates Lucas's contribution—related ideas are expressed as Campbell's law and Goodhart's law—but in a 1976 paper, Lucas drove to the point that this simple notion invalidated policy advice based on conclusions draw ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Michael Woodford (economist)
Michael Dean Woodford (born 1955) is an American macroeconomist and monetary theorist who currently teaches at Columbia University. Academic career Woodford holds B.A. from the University of Chicago (1977) and a J.D. from Yale Law School (1980). He completed his Ph.D. in economics at MIT in 1983. He began his teaching career at Columbia, and then taught at Chicago and Princeton before returning to Columbia to accept the John Bates Clark chair in 2004. He was awarded the John D. and Catherine T. MacArthur Foundation Prize Fellowship, which financed his research from 1981 to 1986. In 2007, he was awarded the Deutsche Bank Prize. Theoretical contributions Woodford's early research topics included sunspot equilibria, and imperfect competition. Thereafter he began to work on macroeconomic models with sticky prices; together with Julio Rotemberg he developed one of the first microfounded New Keynesian macroeconomic models. Since then he has used this framework to study many topi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Neutrality Of Money
Neutral or neutrality may refer to: Mathematics and natural science Biology * Neutral organisms, in ecology, those that obey the unified neutral theory of biodiversity Chemistry and physics * Neutralization (chemistry), a chemical reaction in which an acid and a base react quantitatively with each other * Neutral solution, a chemical solution which is neither acidic nor basic * Neutral particle, a particle without electrical charge Mathematics * Neutral element or identity element, in mathematics, a special element with respect to a binary operation, such that if the operation is applied to any element in a set, that element is unchanged * Neutral vector, a multivariate random variable that exhibits a particular type of statistical independence (Dirichlet distribution) Philosophy * Neutrality (philosophy), the absence of declared or intentional bias * Neutrality (psychoanalysis) * Neutral level, the physical or material traces of esthesic and poietic processes identified i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Technology Shock
Technology shocks are sudden changes in technology that significantly affect economic, social, political or other outcomes. In economics, the term technology shock usually refers to events in a macroeconomic model, that change the production function. Usually this is modeled with an aggregate production function that has a scaling factor. Normally reference is made to positive (i.e., productivity enhancing) technological changes, though technology shocks can also be contractionary. The term “shock” connotes the fact that technological progress is not always gradual – there can be large-scale discontinuous changes that significantly alter production methods and outputs in an industry, or in the economy as a whole. Such a technology shock can occur in many different ways. For example, it may be the result of advances in science that enable new trajectories of innovation, or may result when an existing technological alternative improves to a point that it overtakes the domina ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
