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Jun 26, 2024 · Neoclassical economics emerged as a theory in the 1900s. Neoclassical economists believe that a consumer's first concern is to maximize personal satisfaction, also known as...
- Will Kenton
Economic crises and the lack of an adequate explanation for involuntary unemployment are identified as the main weaknesses of neoclassical economics. The alternative of Keynesian macroeconomics is presented, showing how macroeconomics dealt with these shortcomings.
Feb 2, 2022 · For neoclassical theory, the debate showed how centralized, in fact, the Walrasian model of general competitive equilibrium theory is – perhaps it is even better suited as a model for a socialist rather than for a capitalist economy.
- reinhard.neck@aau.at
Nov 20, 2021 · General equilibrium theory lost its dominant position in theoretical economic studies, with its role of setting the research agenda taken over by what this article calls the “new microeconomic theories,” principally decision theory, game theory, and mechanism design.
It is easy to see why a neoclassical Keynesian economist would oppose a tax increase during a recession. Higher taxes discourage consumption which reduces aggregate spending. The drop in spending leads to lower output and employment and thus harms an already weak economy.
At the end of the 1930s, von Neumann, Morgenstern, Wald, Leontief, Tintner, Marschak, Frisch, and many others were working in America. The presence of these economists in the American intellectual circles of the 1940s and 1950s had many effects on the evolution of general-equilibrium theory.
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But to the extent these schools reject the core building blocks of neoclassical economics—as Austrians reject optimization, for example—they are regarded by mainstream neoclassical economists as defenders of lost causes or as kooks, misguided critics, and antiscientific oddballs.
