J.M. Keynes, Neoclassical Synthesis, New Neoclassical Synthesis and the Crisis: the Current State of Macroeconomic Theory

Description

The aim of this paper is to describe chronologically the evolution ofmacroeconomic theory since the publication of the General Theory of J. M.Keynes in 1936 until the most recent macroeconomic developments motivatedby the global economic crisis of 2008-2009.First, the developments made in the field of closed economies will bedescribed, highlighting the contributions of Keynes and the Keynesians andmonetarist’s developments, as well as the consensus reached between thesetwo schools in the neoclassical synthesis in the fifties and the sixties of thelast century. Subsequently, the contributions of the New Classical and NewKeynesian economics made in the last four decades and the consensus amongthem —the so-called New Neoclassical Synthesis— will be overviewed.Then, given the decisive importance of the external sector to Latin Americaeconomies, a presentation of the progress made in the field of open economymacroeconomics will be conducted, with Mundell, Dornbusch, Krugman,Obstfeld and Rogoff as their leading characters.At the end of the section we discuss the future of Macroeconomic Theory andPolicy, given the sharp criticism it has received following the internationalcrisis of 2008-2009.