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However, by the late 1980s, certain failures of the new classical models, both theoretical (see Real business cycle theory) and empirical (see the "Volcker recession") [98] hastened the emergence of New Keynesian economics, a school that sought to unite the most realistic aspects of Keynesian and neo-classical assumptions and place them on more ...
Marxism and Keynesianism is a method of understanding and comparing the works of influential economists John Maynard Keynes and Karl Marx.Both men's works has fostered respective schools of economic thought (Marxian economics and Keynesian economics) that have had significant influence in various academic circles as well as in influencing government policy of various states.
Keynesian economics has developed from the work of John Maynard Keynes and focused on macroeconomics in the short-run, particularly the rigidities caused when prices are fixed. It has two successors. Post-Keynesian economics is an alternative school—one of the successors to the Keynesian tradition with a focus on macroeconomics. They ...
Despite discarding Keynesian theory, new classical economists did share the Keynesian focus on explaining short-run fluctuations. New classicals replaced monetarists as the primary opponents to Keynesianism and changed the primary debate in macroeconomics from whether to look at short-run fluctuations to whether macroeconomic models should be ...
New Keynesian economists agree with New Classical economists that in the long run, the classical dichotomy holds: changes in the money supply are neutral. However, because prices are sticky in the New Keynesian model, an increase in the money supply (or equivalently, a decrease in the interest rate) does increase output and lower unemployment ...
New Classical and monetarist criticisms led by Robert Lucas, Jr. and Milton Friedman respectively forced a labored rethinking of Keynesian economics. In particular, Lucas designed the Lucas critique primarily as a means to cast doubt on the Keynesian model. This strengthened the case for macro models to be based on microeconomics.
Keynes believed the classical theory was a "special case" that applied only to the particular conditions present in the 19th century, his theory being the general one. Classical economists had believed in Say's law , which, simply put, states that " supply creates its demand ", and that in a free-market workers would always be willing to lower ...
The classical economists took the theory of the determinants of the level and growth of population as part of Political Economy. Since then, the theory of population has been seen as part of Demography. In contrast to the Classical theory, the following determinants of the neoclassical theory value are seen as exogenous to neoclassical economics: