This book assesses major schools of thought in macroeconomic theory between the Great Depression and the Long Recession, focusing on their analysis of cycles, crises and macro-policy. It explores the road from the dominance of Keynesian ideas to those of New Classical Macroeconomics (NCM) toward the end of the millennium.

The book covers the early influential work of Knut Wicksell; the economic debates of the 1930s, with core contributions from John Maynard Keynes and Friedrich von Hayek; the rise of Keynesianism in the 1950s and its decline since the 1970s; the rise of Monetarism in the 1960s; and NCM's subsequent rise to prominence.

Finally, the book outlines how macroeconomics has evolved from its birth in the 1930s as a theory separate from microeconomics, resulting in a split between macro- and micro-theories, and ended up with a new hegemonic paradigm based on microfoundations. The ensuing policy thinking witnessed a transformation from "active" macro-policy after the Great Depression to a far more "passive" macro-policy during the last quarter of the twentieth century, which may have contributed to missing the signs of the impending Long Recession of 2008.

"When the 2008 crisis struck, macroeconomists were caught with models that were theoretically elegant yet inappropriate to the needs of the moment. A broader historical perspective may have prevented the jettisoning of Keynesian models that had proved useful in the past and might have done so again. This highly readable book by Arie Arnon is a wonderful antidote to economists' short time horizon and contributes mightily to restore the profession's "collective memory" of the diversity of ideas within macroeconomics."

Professor Dani Rodrik, Harvard Kennedy School

Autorentext

Arie Arnon is a Professor Emeritus of Economics at Ben Gurion University (Israel); an Associate Fellow of the Truman Institute, Hebrew University; and the Israeli coordinator of the Aix Group. Since 2007 Arnon has coordinated the Thomas Guggenheim Program on the History of Economic Thought at Ben Gurion University. He works mainly in the field of history of economic thought, covering monetary theory and macroeconomics. His publications include "Thomas Tooke: Pioneer of Monetary Theory" (1991) and "Monetary Theory and Policy from Hume and Smith to Wicksell: Money, Credit and the Economy" (2011), which received the Best Book Award from ESHET - the European Society for the History of Economic Thought - in 2012.

Inhalt

Part I. Theory and Policy around the Great Depression.- Chapter 1. Wicksell's Novel Macro Thinking: Consequences for Understanding Cycles, Crises and Policy.- Chapter 2. The Early Keynes as a Marshallian: Before the Great Depression.- Chapter 3. The Young Hayek: Towards a Monetary Theory of Cycles.- Chapter 4. A Distraction: The Heated Hayek - Keynes Exchange about the Treatise.- Part II. Keynes's and Hayek's New Thinking: 1936 to 1946.- Chapter 5. Keynes's General Theory: The Central Messages.- Chapter 6. Hayek's Transformation on Knowledge in Economics.- Chapter 7. Keynes and Hayek After 1936: An Intriguing Silence and Surprising Agreements.- Part III. 1950s to 1980s: The Years of Keynesianism & The Counter Revolutions.- Chapter 8. The Ascent of Keynesianism: The IS-LM Hegemony.- Chapter 9. Opposing Keynesianism: Friedman and the Rise of Monetarism.- Chapter 10. Opposing Keynesianism: Hayek's 1970s Volte Face - From Opposing to Supporting 'Free Banking'.- Chapter 11. Opposing Keynesianism: New Classical Macroeconomics From Rational Expectations, through Real Business Cycles, to DSGE and (the so called) New Keynesians.- Part IV: Macroeconomics before the Long Recession: The Return of Micro & Decline of Macro.- Chapter 12. How Did Micro Come to Reign Over Macro Again? On Microeconomics, Macroeconomics and Microfoundations for Macro.- Chapter 13. On Some Dissenting Views: 'Post-Keynesians' and Hyman Minsky.- Chapter 14. Between Simplicity and Complexity: Had 2008 Witnessed a Failure of Economic Simplicity?.- Chapter 15. Epilogue: The Road of Macroeconomics Away from Keynesian Economics