Entrepreneurship, knowledge and employment

Edmond Malinvaud's criticisms to New Classical Macroeconomics: Restoring the rationale of the "Old Keynesians" stance

Matthieu Renault, University of São Paulo

If the “standard narrative” of the history of macroeconomics usually depicts macroeconomics in a state of crisis during the 1970s, it rarely goes into great details. This standard narrative basically states that Robert Lucas and his new classical followers merely took the stage, arguing persuasively that Keynesian macroeconomics – as well as the “Neoclassical synthesis” – had no sound microfoundations. Thus, the breakdown of this longstanding mainstream seems to have occurred without any trouble or resistance, as if every macroeconomist at the time was suddenly convinced of its theoretical and empirical irrelevance. By contrast, the standard narrative heavily insists on the long-lasting conflicting period that opposed New Keynesian and New Classical economists, starting in the 1970s and ending with the rise of the DSGE models and the “New Neoclassical Synthesis”. Yet, other voices, different from the New Keynesian’s, did oppose New Classical Macro in the 1970s and in the subsequent decades. But the standard narrative can hardly account for these voices because they did oppose New Keynesian Economics as well (by considering the latter as the New Classical Macro’s hidden daughter). These dissonant voices owe to the old generation of Keynesian economists who could easily be labeled “Old Keynesians”. If Robert M. Solow and James Tobin were the “Old Keynesians’” leading figures, many others and no less important figures (Modigliani, Klein, Okun, Haberler, etc.) did also resist New Classical Macro and the evolution of modern macro, in the 1970s and afterwards. Compared to the “Old Keynesians’” criticisms, those of Edmond Malinvaud present two advantages. First, since Malinvaud took early part in the search for Microfoundations in macroeconomics, contributing to this program throughout the 1970s and the 1980s, his criticisms were more informed about modern achievements. Second, Malinvaud’s criticisms were more systematic than those of the “Old Keynesians”, in the sense tha

Area:

Keywords: History of macroeconomics, Edmond Malinvaud, New Classical Macro

Paper file