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Short‐Run Macro After the Crisis: The End of the “New” Neoclassical Synthesis?

Author

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  • Oliver Landmann

    (Institut für allgemeine Wirtschaftsforschung, Universität Freiburg)

Abstract

The Financial Crisis of 2008, and the Great Recession in its wake, have shaken up macroeconomics. The paradigm of the “New” Neoclassical Synthesis, which seemed to provide a robust framework of analysis for short‐run macro not long ago, fails to capture key elements of the recent crisis. This paper reviews the current reappraisal of the paradigm in the light of the history of macroeconomic thought. Twice in the past 80 years, a major macroeconomic crisis led to the breakthrough of a new paradigm that was to capture the imagination of an entire generation of macroeconomists. This time is different. Whereas the pre‐crisis consensus in the profession is broken, a sweeping transition to a single new paradigm is not in sight. Instead, macroeconomics is in the process of loosening the methodological straightjacket of the “New” Neoclassical Synthesis, thereby opening a door for a return to its original purpose: the study of information and coordination in a market economy.

Suggested Citation

  • Oliver Landmann, 2014. "Short‐Run Macro After the Crisis: The End of the “New” Neoclassical Synthesis?," Discussion Paper Series 27, Department of International Economic Policy, University of Freiburg, revised Jan 2014.
    • Handle: RePEc:fre:wpaper:27
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    File URL: https://www.iep.uni-freiburg.de/discussion-papers/repec/fre/wpaper/files/dp27_short_run_macro.pdf
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On Macroeconomics After the Financial Crisis
      by bbatiz in NEP-HIS blog on 2014-06-04 00:23:29
    2. On Macroeconomics After the Financial Crisis
      by ? in The NEP-HIS Blog on 2014-06-04 01:23:00

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    Cited by:

    1. Soldatos, Gerasimos T. & Varelas, Erotokritos, 2017. "Firms’ rational expectations, workers’ psychology, and monetary policy in a behavioral real business cycle model," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 129-139.

    More about this item

    Keywords

    Financial Crisis; Great Recession; Macroeconomics; New Neoclassical Synthesis; Keynesian Economics; New Classical Economics; Great Moderation;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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