Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103951
Authors: 
Landmann, Oliver
Year of Publication: 
2014
Series/Report no.: 
Discussion Paper Series, University of Freiburg, Department of International Economic Policy 27
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.
Subjects: 
Financial Crisis
Great Recession
Macroeconomics
New Neoclassical Synthesis
Keynesian Economics
New Classical Economics
Great Moderation
JEL: 
B22
B40
E10
E12
E13
Document Type: 
Working Paper

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