文档介绍：The Warring Schools of Macroeconomics
The Purpose Of This Lesson
Is to examine three of the major controversies among the five major warring schools of macroeconomics.
We also take a more in-depth look at New Classical economics.
New Classical
Economics
Classical
Economics
Keynesianism
Supply Side
Economics
arism
Three Important Questions
What causes instability in the economy?
Is the economy self-correcting?
Should the government adhere追随 to rules or use discretion in setting economic policy?
The so-called “New Classical” is rooted in the Classical economic tradition.
It is important not just because of the strong influence it has had on recent macroeconomic theory but also because New Classical economists played a pivotal中枢关键的 role in the 1992 defeat of e Bush by Bill Clinton.
New Classical Economics
e Bush’s Presidency
When Bush assumed the presidency in 1988, the economy was saddled with both huge budget and trade deficits.
Even more of a problem was that by 1990, the economy was sliding into a recession.
Bush’s Advisors
This recession would have been a clear signal to engage in expansionary policy to any red-blooded充满活力的 Keynesian.
In the Bush White House, Ronald Reagan’s Supply Side advisors had been supplanted排挤 not by Keynesians but rather by a new breed of economists significantly influenced by New Classical Thinking.
New Classical economics is based on the controversial theory of “rational expectations.”
This theory was developed by Nobel Laureate Robert Lucas of the University of Chicago along with Thomas Sargent of Stanford and Robert Barro of Harvard.
It provides a sharp contrast to the notion of “adaptive expectations” we previously introduced in our lesson on inflation and unemployment.
New Classical Economics
Adaptive Expectations
You may recall from that lesson that with adaptive expectations, people tend to assume that inflation will continue to be what it already is.
For example, if inflation was 3% last year, adaptive expe