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Keynesian, New Keynesian and New Classical Economics

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  • Greenwald, B
  • Stiglitz, Joseph E

Abstract

Formal developments of the Keynes's General Theory, while attempting to achieve a new classical synthesis of the realities of observed macroeconomic fluctuation and unemployment with classical microeconomics, have come to be surprisingly closely tied to the old classical models. Keynes's insights have been reduced largely to an assumption of nominal price rigidities. In fact, Keynes's original qualitative approach contained a much richer description of economic reality. This paper describes how fully rational microeconomic models incorporating imperfect information and incomplete markets, very much in the Keynesian tradition, imply macroeconomic behavior that encompasses most of the qualitative insights of the General Theory. Copyright 1987 by Royal Economic Society.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 39 (1987)
Issue (Month): 1 (March)
Pages: 119-33

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Handle: RePEc:oup:oxecpp:v:39:y:1987:i:1:p:119-33

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References

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  1. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  2. Stiglitz, Joseph E, 1985. "Credit Markets and the Control of Capital," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(2), pages 133-52, May.
  3. Blinder, Alan S & Stiglitz, Joseph E, 1983. "Money, Credit Constraints, and Economic Activity," American Economic Review, American Economic Association, vol. 73(2), pages 297-302, May.
  4. Akerlof, George A & Yellen, Janet L, 1985. "A Near-rational Model of the Business Cycle, with Wage and Price Intertia," The Quarterly Journal of Economics, MIT Press, vol. 100(5), pages 823-38, Supp..
  5. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  6. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
  7. Greenwald, Bruce C & Stiglitz, Joseph E, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 229-64, May.
  8. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
  9. Joseph E. Stiglitz, 1983. "On the Relevance or Irrelevance of Public Financial Policy: Indexation,Price Rigidities and Optimal Monetary Policy," NBER Working Papers 1106, National Bureau of Economic Research, Inc.
  10. Stiglitz, Joseph E & Weiss, Andrew, 1983. "Incentive Effects of Terminations: Applications to the Credit and Labor Markets," American Economic Review, American Economic Association, vol. 73(5), pages 912-27, December.
  11. 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.
  12. Bruce Greenwald & Joseph E. Stiglitz, 1987. "Money, Imperfect Information and Economic Fluctuations," NBER Working Papers 2188, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. R.Fiorentini & R.Tamborini, 2000. "Monetary policy, credit and aggregate supply: the evidence from Italy," General Economics and Teaching 0004008, EconWPA.
  2. Joseph E. Stiglitz, 1989. "Money, Credit, and Business Fluctuations," NBER Working Papers 2823, National Bureau of Economic Research, Inc.
  3. J. Barkley Rosser, 2003. "A Nobel Prize for Asymmetric Information: The economic contributions of George Akerlof, Michael Spence and Joseph Stiglitz," Review of Political Economy, Taylor & Francis Journals, vol. 15(1), pages 3-21.
  4. Fernando Tenjo & Enrique López, 2003. "Credit bubble and stagnation in Colombia, 1990-2001," COLOMBIAN ECONOMIC JOURNAL, UN - RCE - CID.
  5. Robert Flood & Michael Mussa, 1994. "Issues Concerning Nominal Anchors for Monetary Policy," NBER Working Papers 4850, National Bureau of Economic Research, Inc.
  6. Floro Ernesto Caroleo, 2004. "Fondamenti teorici della rigidità' salariale nell'ambito dei “Non Market Clearing Models”," CELPE Discussion Papers 79, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  7. Bertocco Giancarlo, 2004. "Are banks really special? A note on the theory of financial intermediaries," Economics and Quantitative Methods qf04021, Department of Economics, University of Insubria.
  8. Georgios Argitis, 2008. "Finance, Investment and Macroeconomic Performance," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 71-88.
  9. Roger Backhouse & Mauro Boianovsky, 2005. "Disequilibrium Macroeconomics: An Episode In The Transformation Of Modern Macroeconomics," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 012, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  10. Fernando Tenjo Galarza & Enrique López Enciso, 2002. "Burbuja Y Estancamiento Del Credito En Colombia," BORRADORES DE ECONOMIA 002072, BANCO DE LA REPÚBLICA.
  11. Cabelli, Anna & Cedrini, Mario, 2013. "Keynes's General Theory, Treatise on Money, and Tract on Monetary Reform: Different Theories, Same Methodological Approach?," CESMEP Working Papers 201302, University of Turin.
  12. Guerrazzi, Marco & Meccheri, Nicola, 2012. "From wage rigidity to labour market institution rigidity: A turning-point in explaining unemployment?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 189-197.
  13. Roberto Tamborini, 1997. "A macroeconomic model of bankruptcy," CEEL Working Papers 9702, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  14. Miglierina Enrico & Molho Elena, 2002. "Well-posedness and convexity in vector optimization," Economics and Quantitative Methods qf0221, Department of Economics, University of Insubria.
  15. Georg Winckler, 1988. "Neustrukturierung der keynesianischen Theorie?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 14(2), pages 183-196.
  16. Riccardo Fiorentini & Roberto Tamborini, 2001. "The Monetary Transmission Mechanism in Italy: The Credit Channel and a Missing Ring," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 60(1), pages 1-42, June.
  17. Andaluz-Alcazar, Alvaro, 2012. "Choix d'investissement sous incertitude des gestionnaires des réseaux de distribution (GRD) en Europe à l'horizon 2030," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/10862 edited by Keppler, Jan Horst, September.

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