The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Neoclassical Synthesis

  • Olivier Jean Blanchard
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1218

Abstract

The term ‘neoclassical synthesis’ appears to have been coined by Paul Samuelson to denote the consensus view of macroeconomics which emerged in the mid-1950s in the United States. This synthesis remained the dominant paradigm for another 20 years, in which most of the important contributions, by Hicks, Modigliani, Solow, Tobin and others, fit quite naturally. The synthesis had, however, suffered from the start from schizophrenia in its relation to microeconomics, which eventually led to a serious crisis from which it is only now re-emerging. I describe the initial synthesis, the mature synthesis, the crisis and the new emerging synthesis.

Keywords

Aggregate demand Animal spirits Consumption function Countercyclical fiscal policy Dynamic stochastic general equilibrium (DSGE) models Econometrics Excess demand and supply Hicks, J. Imperfect competition Imperfect financial markets Interest rates Intertemporal utility maximization Investment function IS–LM model Keynesianism Life-cycle hypothesis Liquidity constraints Lucas, R. Market clearing Microfoundations Modigliani, F. Monetary policy MPS–FMP model Neoclassical synthesis Neoclassical theory of investment New classical synthesis New Keynesian synthesis New neoclassical synthesis Nominal rigidities Permanent-income hypothesis Phillips curve Pigou effect Price and wage adjustment Public debt Rational behaviour Real business cycles Samuelson, P. Stagflation tâtonnement Wage rigidity Wealth effects 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Olivier Jean Blanchard
    • 1
  1. 1.