Keynesian, New Keynesian, and New Classical Economics / Bruce C. Greenwald, Joseph E. Stiglitz.

Format:

Book

Author/Creator:

Greenwald, Bruce C.

Contributor:

National Bureau of Economic Research.

Stiglitz, Joseph E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2160.

NBER working paper series no. w2160

Language:

English

Subjects (All):

Keynesian economics.

Macroeconomics.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Cambridge : National Bureau of Economic Research, 1987.

Summary:

Much of the new theory of macro-economics that has been built upon micro-economic models of imperfect information leads to conclusions which are surprisingly close in spirit to Keynes' original analysis. This paper summarizes the macro-economic implications of information-based models of efficiency wages, credit-rationing and the breakdown of financial markets for equity-type securities. It shows how these models lead to behavior by firms and interactions among economic agents that account for many of the phenomena identified by Keynes in qualitative terms which were largely lost in subsequent formalizations of the Keynesian model. These imperfect information macro-models provide consistent theoretical explanations in the Keynesian spirit in unemployment, investment concentrated business cycles, rigid prices and the effectiveness of monetary and fiscal policy interventions. In doing so, they reconcile macro and micro-economic analysis in a way that has so far been achieved neither by the traditional Keynesians, who assumed away the micro-dimension of the problem, nor by the new classical economists who assumed away the macro-dimension of the problem.

Notes:

Print version record

February 1987.