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The History of Macroeconomics Viewed against the Background of the Marshall-Walras Divide

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  • Michel De Vroey

Abstract

Analysing the recent history of macroeconomics, my paper claims that the new classical revolution should be viewed as a substitution of Walrasian macroeconomics to the earlier prevailing Marshalian macroeconomics. The first part of the paper is concerned with two conceptual prerequisites, the relationship between macroeconomics and general equilibrium, the meaning of the “Keynesianism” modifier. In a second part, the different facets of the Marshall-Walras divide are expounded. My general claim is substantiated in the third paper of the paper. Herein, I claim that the IS-LM model is a simplified Marshallian general equilibrium model while real business cycle models belong to the Walrasian reserach programme. Finally, I express my scepticism as to the possibility of a New Neoclassical Synthesis.

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Bibliographic Info

Article provided by Duke University Press in its journal History of Political Economy.

Volume (Year): 36 (2004)
Issue (Month): 5 (Supplement)
Pages: 57-91

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Handle: RePEc:hop:hopeec:v:36:y:2004:i:5:p:57-91

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Related research

Keywords: Alfred Marshall; Leon Walras; macroeconomics;

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References

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  1. Barro, Robert J & Grossman, Herschel I, 1971. "A General Disequilibrium Model of Income and Employment," American Economic Review, American Economic Association, vol. 61(1), pages 82-93, March.
  2. Olivier Blanchard, 2000. "What do we know about Macroeconomics that Fisher and Wicksell did not?," NBER Working Papers 7550, National Bureau of Economic Research, Inc.
  3. Pascal Bridel, 2002. "Patinkin, Walras and the 'money-in-the-utility-function' tradition," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(2), pages 268-292.
  4. Michel De Vroey, 2001. "Friedman and Lucas on the Phillips Curve: From a Disequilibrium to an Equilibrium Approach," Eastern Economic Journal, Eastern Economic Association, vol. 27(2), pages 127-148, Spring.
  5. Jean-Pierre DANTHINE, 1997. "In Search of a Successor to IS-LM," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9710, Université de Lausanne, Faculté des HEC, DEEP.
  6. Roger E. A. Farmer, 1999. "Macroeconomics of Self-fulfilling Prophecies, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062038, December.
  7. Marvin Goodfriend & Robert G. King, 1998. "The new neoclassical synthesis and the role of monetary policy," Working Paper 98-05, Federal Reserve Bank of Richmond.
  8. De Vroey, Michel, 1997. "IS-LM "à la Hicks" versus IS-LM "à la Modigliani"," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1998003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  9. Laidler, David, 1981. "Monetarism: An Interpretation and an Assessment," Economic Journal, Royal Economic Society, vol. 91(361), pages 1-28, March.
  10. Goulven Rubin, 2004. "Patinkin on IS-LM: an Alternative to Modigliani," Post-Print halshs-00635213, HAL.
  11. Frank Hahn & Robert Solow, 1997. "A Critical Essay on Modern Macroeconomic Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 026258154x, December.
  12. Brian Snowdon & Howard Vane, 1998. "Transforming macroeconomics: an interview with Robert E. Lucas Jr," Journal of Economic Methodology, Taylor & Francis Journals, vol. 5(1), pages 115-146.
  13. Michel De Vroey, 1998. "Is the tatonnement hypothesis a good caricature of market forces?," Journal of Economic Methodology, Taylor & Francis Journals, vol. 5(2), pages 201-221.
  14. Laidler,David, 1999. "Fabricating the Keynesian Revolution," Cambridge Books, Cambridge University Press, number 9780521645966.
  15. Michel De Vroey, 2003. "Perfect information a la Walras versus perfect information a la Marshall," Journal of Economic Methodology, Taylor & Francis Journals, vol. 10(4), pages 465-492.
  16. Snowdon, Brian & Vane, Howard R., 1996. "The development of modern macroeconomics: Reflections in the light of Johnson's analysis after twenty-five years," Journal of Macroeconomics, Elsevier, vol. 18(3), pages 381-401.
  17. Friedman, Milton, 1972. "Comments on the Critics," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 906-50, Sept.-Oct.
  18. De Vroey, Michel, 1999. "Equilibrium and Disequilibrium in Economic Theory: A Confrontation of the Classical, Marshallian and Walras-Hicksian Conceptions," Economics and Philosophy, Cambridge University Press, vol. 15(02), pages 161-185, October.
  19. JASKOLD GABSZEWICZ, Jean & VIAL, Jean-Philippe, . "Oligopoly "à la Cournot" in a general equilibrium analysis," CORE Discussion Papers RP -106, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  20. Hart, Oliver D, 1979. "Monopolistic Competition in a Large Economy with Differentiated Commodities," Review of Economic Studies, Wiley Blackwell, vol. 46(1), pages 1-30, January.
  21. Robert G. King, 1993. "Will the New Keynesian Macroeconomics Resurrect the IS-LM Model?," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 67-82, Winter.
  22. anonymous, 1992. "Interview with Milton Friedman," The Region, Federal Reserve Bank of Minneapolis, issue June.
  23. Johnson, Harry G, 1971. "The Keynesian Revolution and the Monetarist Counter-Revolution," American Economic Review, American Economic Association, vol. 61(2), pages 1-14, May.
  24. Lucas, Robert E, Jr, 1981. "Tobin and Monetarism: A Review Article," Journal of Economic Literature, American Economic Association, vol. 19(2), pages 558-67, June.
  25. Tobin, James, 1981. "The Monetarist Counter-Revolution Today-An Appraisal," Economic Journal, Royal Economic Society, vol. 91(361), pages 29-42, March.
  26. Brian Snowdon & Howard R. Vane, 1997. "Modern macroeconomics and its evolution from a monetarist perspective: An interview with Professor Milton Friedman," Journal of Economic Studies, Emerald Group Publishing, vol. 24(4), pages 191-221, September.
  27. Alessandro Vercelli, 1999. "The evolution of IS-LM models: empirical evidence and theoretical presuppositions," Journal of Economic Methodology, Taylor & Francis Journals, vol. 6(2), pages 199-219.
  28. De Vroey, Michel, 2002. "Equilibrium and Disequilibrium in Walrasian and Neo-Walrasian Economics," Journal of the History of Economic Thought, Cambridge University Press, vol. 24(04), pages 405-426, December.
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Citations

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Cited by:
  1. Kevin Hoover, 2005. "Dr. Keynes: Economic Theory in a Diagnostic Science," Working Papers 63, University of California, Davis, Department of Economics.
  2. Michel De Vroey, 2007. "Did The Market-Clearing Postulate Pre-Exist New Classical Economics? The Case Of Marshallian Theory," Manchester School, University of Manchester, vol. 75(3), pages 328-348, 06.
  3. Michel DE VROEY, 2010. "Microfoundations: a decisive dividing line between Keynesian and new classical macroeconomics?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010030, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. Schilirò, Daniele, 2005. "Il simposio su "mr. Keynes' system" all'Oxford meeting e il modello is-lm
    [The symposium on " mr. Keynes' system" to the Oxford meeting and the is-lm model]
    ," MPRA Paper 33019, University Library of Munich, Germany.
  5. Mark Hayes, 2006. "The Economics of Keynes: A New Guide to The General Theory," Books, Post Keynesian Economics Study Group (PKSG), number nggt.
  6. Pedro Garcia Duarte, 2011. "Not Going Away? Microfoundations in the Making of a New Consensus in Macroeconomics," Working Papers, Department of Economics 2011_02, University of São Paulo (FEA-USP).
  7. Pedro Garcia Duarte, 2013. "A Path Through the Wilderness: Time Discounting in Growth Models," Working Papers, Department of Economics 2013_18, University of São Paulo (FEA-USP).

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