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

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  • Oliver Landmann

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    (Institut für allgemeine Wirtschaftsforschung, Universität Freiburg)

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    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.

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    File URL: http://www.vwl.uni-freiburg.de/iwipol/REPEC/fre/wpaper/DP27_Landmann_Short_Run_Macro.pdf
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    Bibliographic Info

    Paper provided by Department of International Economic Policy, University of Freiburg in its series Discussion Paper Series with number 27.

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    Length: 20 pages
    Date of creation: Jan 2014
    Date of revision: Jan 2014
    Handle: RePEc:fre:wpaper:27

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    Related research

    Keywords: Financial Crisis; Great Recession; Macroeconomics; New Neoclassical Synthesis; Keynesian Economics; New Classical Economics; Great Moderation;

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    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 2014-06-03 19:23:29
    2. On Macroeconomics After the Financial Crisis
      by ? in The NEP-HIS Blog on 2014-06-03 20:23:00

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