Understanding Modern Macroeconomic Schools : A Comparative Analysis

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  In this book, we attempt to make a comparative evaluation of modern macroeconomic
  schools: Monetarism and New Classical School based on the Classical System that envisage
  automatic full employment or natural rate of unemployment (NRU) equilibrium (AFNE or
  ANRUE) vs. New Keynesian and Post-Keynesian Economics based on the Keynesian System
  which gives unemployment equilibrium (UNE) or non-automatic NRU equilibrium
  (NANRUE) due to insufficiency of aggregate demand.
  In order to determine which school is relevant, first the basic assumptions of these
  systems are compared: i) rational vs. adjusted vs. heterogeneous expectations, ii) existence of
  perfect competition in all markets leading to flexibility of prices and wages vs. imperfect
  competition giving rise to rigidities, and iii) presence or lack of coordination between
  markets.
  In the final phase of our evaluations the performance of the developed economies are
  surveyed to establish whether we meet with AFNE or ANRUE or else UNE or NANRUE; and
  whether policy prescriptions devised by respective schools solve or alleviate the problem at
  hand when implemented.
  Our investigations point out that New Keynesian and Post-Keynesian schools are more
  relevant compared to Monetarism and New Classical School. The choice between New
  Keynesian and Post-Keynesian Economics, however, is more difficult to make although New
  Keynesian Economics seems more widespread than Post-Keynesian Economics. Objectively,
  Post-Keynesian assumptions seem more realistic; normatively, however, New Keynesian
  stands seems more fit to the present day move towards globalization.