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Modigliani's 1944 Wage Rigidity Assumption and the Construction of the Neoclassical Synthesis

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  • Rancan, Antonella

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Abstract

Modigliani's 1944 "Econometrica" article is considered one of the most important efforts to reconcile Keynes with classical economic thinking. The aim of this paper is to reconstruct the genesis of Modigliani's article and to reexamine its place in the construction of Neoclassical Synthesis. Modigliani introduced the wage rigidity hypothesis to show how monetary factors influence real variables such as the employment level and the interest rate. Modigliani?s attention to the monetary origin of and solution to unemployment is in stark contrast to the neglect in Neoclassical Synthesis of the monetary side of the system and its inclination towards fiscal policy

Suggested Citation

  • Rancan, Antonella, 2012. "Modigliani's 1944 Wage Rigidity Assumption and the Construction of the Neoclassical Synthesis," Economics & Statistics Discussion Papers esdp12069, University of Molise, Dept. EGSeI.
  • Handle: RePEc:mol:ecsdps:esdp12069
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    References listed on IDEAS

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    1. William Darity, Jr. & Warren Young, 1995. "IS-LM: An Inquest," History of Political Economy, Duke University Press, vol. 27(1), pages 1-41, Spring.
    2. Roger Backhouse, 2002. "Don Patinkin: interpreter of the Keynesian revolution," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(2), pages 186-204.
    3. N. G. Mankiw., 2009. "The Macroeconomist as Scientist and Engineer," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    4. Snowdon, Brian, 2004. "Outside The Mainstream: An Interview With Axel Leijonhufvud," Macroeconomic Dynamics, Cambridge University Press, vol. 8(01), pages 117-145, February.
    5. Goulven Rubin, 2004. "Patinkin on IS-LM: An Alternative to Modigliani," History of Political Economy, Duke University Press, vol. 36(5), pages 190-216, Supplemen.
    6. Alessandro Roncaglia & Mario Tonveronachi, 1985. "Pre-Keynesian roots of the neoclassical synthesis," Cahiers d'Économie Politique, Programme National Persée, vol. 10(1), pages 51-65.
    7. Michael De Vroey, 2000. "IS-LM à la Hicks versus IS-LM à la Modigliani," History of Political Economy, Duke University Press, vol. 32(2), pages 293-316, Summer.
    8. Laidler,David, 1999. "Fabricating the Keynesian Revolution," Cambridge Books, Cambridge University Press, number 9780521641739, May.
    9. Goulven Rubin, 2002. "From equilibrium to disequilibrium: the genesis of Don Patinkin's interpretation of the Keynesian theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(2), pages 205-225.
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    Keywords

    Modigliani; wage rigidity; neoclassical synthesis; Patinkin;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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