Keynes and the (Neo)Classicals: the contest over output, growth and inflation

This paper was submitted as part of a course I undertook concerning economic policy in a global context as part of my major in political economy, and is reproduced below. The full title is written here.

This paper contrasts the determination of output and inflation in Keynes’ General Theory with that of the classical (pre-Keynesian) framework. It explains how the roles of government differ in the management of growth and inflation through fiscal and monetary policies. A distinction should be noted. The classical macroeconomists (Marshall, Jevons, Walras, Pigou) were not the same group as the classical political economists (Smith, Ricardo, Marx). The classical macroeconomists are also known as the neoclassical economists.

Keynes and the (Neo)classicals: the contest over output, growth and inflation

Or How Economists Stopped Worrying and Learned To Love The Multiplier

The history of macroeconomics seems, through the centuries, to have rehearsed a history of vision: animated as it is by stability on the one hand, and its inverse, instability, on the other. There lies in the works of the classical macroeconomists—Jevons, Marshall, Walras, and Pigou—the foremost embodiment of the former, and in Keynes’ General Theory, the latter. By examining these respective systems, for the purposes of contrasting their determinations of output, growth, and inflation (and the management of these components by fiscal and monetary authorities) we will arrive at a clear conception of the differences in economic reasoning of the respective schools.

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