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Keynesian, New Keynesian and New Classical Economics

  • Greenwald, B
  • Stiglitz, Joseph E

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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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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  1. 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.
  2. 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.
  3. repec:oup:qjecon:v:100:y:1985:i:5:p:823-38 is not listed on IDEAS
  4. 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.
  5. repec:oup:qjecon:v:84:y:1970:i:3:p:488-500 is not listed on IDEAS
  6. 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.
  7. 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.
  8. repec:oup:qjecon:v:101:y:1986:i:2:p:229-64 is not listed on IDEAS
  9. 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.
  10. 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.
  11. 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.
  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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