Talk:New classical economics
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Is this the same as neoliberalism? Is there a connection?
I have briefly expanded this stub - comments welcome. More will come soon (hopefully!) User:Geordieandy
Quite how is New Classical Economics different from Neo-Classical Economics (apart from the Anglicism over the Latinism)? Phlogistomania 19:18, Jun 20, 2005 (UTC)
- New classical economics places a much greater emphasis on the idea of expectation.
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[edit] It's not the New classical Economics
It's Neoclassical Economics
Neo and new classical models are distinct (as indicated by their different names). The two articles shouldnt be merged, this would be inaccurate.
[edit] New classical economics and neoclassical economics
The two are quite separate and distinct. Neoclassical economics is based around Marshall's work - the current article at neoclassical economics describes it well. New classical economics is the name generally used for the school of thought that developed in the 1970s and 1980s by e.g. Robert Lucas that uses neoclassical microfoundations to build macroeconomic models. The two articles should not be merged. 80.4.4.158 15:26, 26 October 2005 (UTC)
[edit] I don't think the topics should be merged.
As I understand it, neoclassical economics largely refers to the methodology introduced by Marshall, and later expanded by Samuelson, of employing mathematics and rationality in economics. "Neoclassical economics refers to a general approach (a "metatheory") to economics based on supply and demand which depends on individuals (or any economic agent) operating rationally, each seeking to maximize their individual utility or profit by making choices based on available information. Mainstream economics is largely neoclassical in its assumptions. There have been many critiques of neoclassical economics, both from within orthodox economics, and from outside of it, and often these critiques have been incorporated into new versions of neoclassical theory." see Neoclassical_economics
New classical economics is a school of thought on macroeconomics, and not on economic methodology in general. Furthermore, I have no knowledge of macroeconomists conflating new classical macroeconomics and neoclassical economics; if anything, it has been the case that macroeconomics has two main competing approaches that spawn offshoots in response to each other as the discipline evolves viz. the neoclassical approach and the Keynesian approach. In an adversarial (and seemingly dialectical) manner, the demand-side view (Keynesianism) and the supply-side (Neoclassical) produce the variety of schools of thought, with the New Classical school just one of the many offspring of this interaction (Neokeynsians, Monetarism and New Keynesians some others).
In conclusion, I think this topic should remain independent and be expanded.
[edit] Don't merge
They're too different things. In particular New Classical economics focuses on supply shocks as the driving force behind macroeconomic fluctuations - which is what makes them Classical as opposed to Keynsian where it's the demand doing the work. Neoclassical is a much broader and less well defined term. Both New Classical and Keynsian economics (at least of the American kind) would fall within the broader tent of Neoclassical economics.
- Agreed. "New Classical economics" is a general equilibrium approach to macroeconomics, while Neoclassical economics is the standard, mainstream microeconomic approach. They are completely different topics. Jackson744 20:01, 17 February 2006 (UTC)
[edit] Don't Merge
Firstly it is not the same as Neoliberalism, although there is a connection. Neoliberalism is an ideology, arguably the most dominant one in shaping the world today. New Classical Economics is, as explained above, a school of thought on macroeconomics, others being Keynesianism, monetarism and so on.
"Neoclassical" refers to the methods that arose during the "marginalist revolution" of the 1870s, and is assocated with Walras, Jevons and Menger. The approach took the mathematical tools of differential algebra and used it to model microeconomic phenomena. Gradually this approach, through the likes of Marshall and Samuelson, has come to be the mainstream microeconomics.
"New Classical" economics is a macroeconomic school associated with Robert Lucas Jnr, Sargent, Wallace and Barro. The connection is that the school claims that macroeconomic models should be built on the basis of neoclassical microeconomic foundations. This is in contrast to Keynes and monetarists who built models describing macroeconomic behaviour that could not be explained on the basis of neoclassical economics. New Classical economists claim that markets clear continuously, including the labour market, and as such unemployment is an entirely voluntary phenomenon. They also claim that government intervention, particularly discretionary monetary policy has no effect unless it is unanticipated. This is the rationale for their argument that government should not intefere in the economy. This is also the link to Neoliberalism, an ideology that holds that the free market and international free trade is the optimal solution and government intervention should therefore be minimized. Useful-idiot 21:07, 19 February 2006
[edit] Full employment assumption and search theory
The article claims
At any one time, the macroeconomy is assumed to have a unique equilibrium at full employment
If "New classical economics" refers to the return of macroeconomics to micro foundations, then surely search theory has to be included as a central part of this movement. Indeed, Lucas and Prescott -- two of the four economists listed in the article -- wrote "Equilibrium Search and Unemployment" in the Journal of Economic Theory in 1972. Moreover, search theory, which clearly makes no full employment assumptions, has remained an important branch of modern macro.
The view that "New classical economics" refers merely to a set of models that do not focus on unemployment is not (AFAICT) supported by the econlib entry cited in the article.
Therefore, I think it would be better to say something like:
- new classical economics is the return of macro to micro-foundations.
- some models that attempt to explain X, Y, Z find it convenient to assume full-employment.
- some other models that attempt to explain A, B, C use search theory to describe how people look for work when they are unemployed, and how people decide whether to accept job offers, or do other things like help out with the family.
--Clausen 16:55, 10 March 2006 (UTC)
I generally agree. However I think it'd be more accurate to say that as so far as New Classical theory examines unemployment it focuses on "supply-side" or "structural" causes - hence the "Classical" in New Classical. So search costs, union power, minimum wage laws and other institutional features are used to explain unemployment, unlike in Keynesian economics where unemployment is seen as caused by inadeqaute aggregate demand. Microfoundations is the other side of it.radek 04:48, 12 March 2006 (UTC)
dont merge thaey are distinctly different schools of thought!
