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Arestis and Sawyer’s Criticism on the New Consensus Macroeconomics: Some Issues Related to Emerging Countries

Luiz Fernando de Paula, Fernando Ferrari Filho

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Abstract

As is well known, the New Consensus Macroeconomic (NCM) can be characterized as an extension of the New Keynesian Theory. The New Keynesian Theory was developed in the 1980s and aimed at presenting a theoretical framework to explain what the New Keynesians believe to be the essential aspect of Keynes’s General Theory: the existence of price and wage rigidities. For instance, according to Mankiw and Romer (1991, p.1), ‘[b]ecause wage and price rigidities are often viewed as central to Keynesian economics, much effort was aimed at showing how these rigidities arise from the microeconomics of wage and price setting’. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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What this paper is about

As is well known, the New Consensus Macroeconomic (NCM) can be characterized as an extension of the New Keynesian Theory. The New Keynesian Theory was developed in the 1980s and aimed at presenting a theoretical framework to explain what the New Keynesians believe to be the essential aspect of Keynes’s General Theory: the existence of price and wage rigidities. For instance, according to Mankiw and Romer (1991, p.1), ‘[b]ecause wage and price rigidities are often viewed as central to Keynesian economics, much effort was aimed at showing how these rigidities arise from the microeconomics of wage and price setting’. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Available abstract

As is well known, the New Consensus Macroeconomic (NCM) can be characterized as an extension of the New Keynesian Theory. The New Keynesian Theory was developed in the 1980s and aimed at presenting a theoretical framework to explain what the New Keynesians believe to be the essential aspect of Keynes’s General Theory: the existence of price and wage rigidities. For instance, according to Mankiw and Romer (1991, p.1), ‘[b]ecause wage and price rigidities are often viewed as central to Keynesian economics, much effort was aimed at showing how these rigidities arise from the microeconomics of wage and price setting’. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Key concepts: Economics, Keynesian economics, Romer, Wage, Criticism, New Keynesian economics, Post-Keynesian economics, Effective demand

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