Theory

Characteristic of this theory on the one hand the IS-LM-models derived from the Keynesiani theory are, first aforementioned by John R. Hicks. These curve models design an equilibrium between the IS (investment and savings curve) and the LM (money offer and demand for money) curve. Dependent on the point of equilibrium there can be involuntary unemployment. On the other hand this theory a neoclassical job market (on this full employment finds, if real wages achieve an appropriate level) and a neoclassical production function are added. On this basis the Phillips curve in such a way specified is then derived, which issues an inverse connection of inflation and unemployment. That means: the economic policy can specify conditions of employment on the basis the inflation rate.

Criticism

Into the 1970er years this theory current was criticized by the Monetaristen and the Neoklassikern. The monetarism postulated, the money (at least long-term) in relation to the material economics is neutral. Hence it follows that a vertical Phillips curve exists on a long-term basis, i.e. no connection between inflation and unemployment gives it. Money works at short notice only, if some (the workers) restaurant economics are subject to a money illusion. This means that they interpret their nominal wage increases as real wages paste run gene and do not notice the real wages losses correctly by the inflation. They notice their mistake on a long-term basis and this mechanism lose its effect, except which inflation rate further increased, which brings other problems with itself.

A more fundamental criticism practiced the new classical period. By the acceptance that all restaurant economics have the same model of the economics and rationally behave, it derives these the strict neutrality of the money. In these models there is no possibility to thus affect by political control the economics systematically. By these criticisms and thus that at the same time both inflation rate and unemployment (stagflation) arose, lost the neoclassical synthesis at influence. In many points this theory must be regarded therefore as failed.

Newer developments

Newer macro-economic theories are: Material Business Cycle, new ones neoclassical synthesis, new Keynesianismus and post office Keynesianismus.

Articles in category "Neoclassical synthesis"

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