Editing Economics (section)

=== Post-WWII economics ===

Immediately after World War II, Keynesian was the dominant economic view of the United States establishment and its allies, Marxian economics was the dominant economic view of the Soviet Union nomenklatura and its allies.

==== Monetarism ====
{{Main|Monetarism}}

Monetarism appeared in the 1950s and 1960s, its intellectual leader being [[Milton Friedman]]. Monetarists contended that monetary policy and other monetary shocks, as represented by the growth in the money stock, was an important cause of economic fluctuations, and consequently that monetary policy was more important than fiscal policy for [[stabilization policy|purposes of stabilisation]].<ref>Blanchard et al. (2017), p. 511.</ref><ref name="fed">{{cite web|url=http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm|title=Remarks by Governor Ben S. Bernanke|publisher=The Federal Reserve Board|date=8 November 2002|first=Ben|last=Bernanke|access-date=22 February 2009|archive-date=24 March 2020|archive-url=https://web.archive.org/web/20200324160935/https://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm|url-status=live}}</ref> Friedman was also skeptical about the ability of central banks to conduct a sensible active monetary policy in practice, advocating instead using simple rules such as a steady rate of money growth.<ref>Blanchard et al. (2017), p. 512.</ref>

Monetarism rose to prominence in the 1970s and 1980s, when several major central banks followed a monetarist-inspired policy, but was later abandoned because the results were unsatisfactory.<ref>Blanchard et al. (2017), p. 483–484.</ref><ref name="Historical">{{cite web |title=Federal Reserve Board - Historical Approaches to Monetary Policy |url=https://www.federalreserve.gov/monetarypolicy/historical-approaches-to-monetary-policy.htm |website=Board of Governors of the Federal Reserve System |access-date=29 October 2023 |language=en |date=8 March 2018}}</ref>

==== New classical economics ====
{{Main|New classical macroeconomics}}

A more fundamental challenge to the prevailing Keynesian paradigm came in the 1970s from [[new classical macroeconomics|new classical economists]] like [[Robert Lucas Jr.|Robert Lucas]], [[Thomas Sargent]] and [[Edward Prescott]]. They introduced the notion of [[rational expectations]] in economics, which had profound implications for many economic discussions, among which were the so-called [[Lucas critique]] and the presentation of [[Real business-cycle theory|real business cycle models]].<ref>Blanchard et al. (2017), pp. 512–516.</ref>

==== New Keynesians ====
{{Main|New Keynesian economics}}

During the 1980s, a group of researchers appeared being called [[New Keynesian economics|New Keynesian economists]], including among others [[George Akerlof]], [[Janet Yellen]], [[Gregory Mankiw]] and [[Olivier Blanchard]]. They adopted the principle of rational expectations and other monetarist or new classical ideas such as building upon models employing micro foundations and optimizing behaviour, but simultaneously emphasised the importance of various [[market failure]]s for the functioning of the economy, as had Keynes.<ref>Blanchard et al. (2017), pp. 516–517.</ref> Not least, they proposed various reasons that potentially explained the empirically observed features of [[Nominal rigidity|price and wage rigidity]], usually made to be endogenous features of the models, rather than simply assumed as in older Keynesian-style ones.

====New neoclassical synthesis====
{{Main|New neoclassical synthesis}}

After decades of often heated discussions between Keynesians, monetarists, new classical and new Keynesian economists, a synthesis emerged by the 2000s, often given the name ''the [[new neoclassical synthesis]]''. It integrated the rational expectations and optimizing framework of the new classical theory with a new Keynesian role for nominal rigidities and other market imperfections like [[imperfect information]] in goods, labour and credit markets. The monetarist importance of monetary policy in stabilizing<ref>{{cite journal |last1=Woodford |first1=Michael |title=Convergence in Macroeconomics: Elements of the New Synthesis |journal=American Economic Journal: Macroeconomics |date=2009 |volume=1 |issue=1 |pages=267–279 |doi=10.1257/mac.1.1.267 |jstor=25760267 |url=https://www.jstor.org/stable/25760267 |issn=1945-7707}}</ref> the economy and in particular controlling inflation was recognised as well as the traditional Keynesian insistence that fiscal policy could also play an influential role in affecting [[aggregate demand]]. Methodologically, the synthesis led to a new class of applied models, known as [[dynamic stochastic general equilibrium]] or DSGE models, descending from real business cycles models, but extended with several new Keynesian and other features. These models proved useful and influential in the design of modern monetary policy and are now standard workhorses in most central banks.<ref>Blanchard et al. (2017), pp. 517–518.</ref>

==== After the 2008 financial crisis====
After the [[2008 financial crisis]], macroeconomic research has put greater emphasis on understanding and integrating the financial system into models of the general economy and shedding light on the ways in which problems in the financial sector can turn into major macroeconomic recessions. In this and other research branches, inspiration from [[behavioural economics]] has started playing a more important role in mainstream economic theory.<ref>Blanchard et al. (2017), pp. 518–519.</ref> Also, [[Heterogeneity in economics|heterogeneity]] among the economic agents, e.g. differences in income, plays an increasing role in recent economic research.<ref>{{cite web |last1=Guvenen |first1=Fatih |title=Macroeconomics with Heterogeneity: A Practical Guide |url=https://www.nber.org/system/files/working_papers/w17622/w17622.pdf |website=www.nber.org |publisher=National Bureau of Economic Research |access-date=29 October 2023}}</ref>