As each Monday, we continue, in collaboration with academics at the origin of the "dictionary of Economics" (PUF, 2001), the publication of our lexicon of the economy.
Teaching macroeconomics is probably more difficult now than forty or fifty years ago. Not only because the national framework is now largely obsolete, but also because analysis was then based on a Keynesian model simplified, completed by a Phillips curve, and then by taking account of the relations with the outside world.
The 1970s were marked by the appearance of the "new classical economics", the "rational expectations revolution", whose main leaders are r. Lucas (Nobel Prize 1995), th. Sargent, n. Wallace and r. Barro. If this current appears dominant in the anglo-saxon world in the 1980s, its right-of-way is largely compromised ten years later by currents claiming of filiation with the thought of Keynes, while incorporating some of the elements of the "new classical economics" (NEC). Where the description of "New Keynesian economics" (NEK), which appears in a titled article by l. Ball, N.G. Mankiw and d. Romer (1988).
Opposition to the NEC should be clarified, because it concerns the formation of expectations or the use of methodological individualism. The Central opposition is elsewhere: this is the role of markets. While the NEC proclaims its adherence to the more liberal positions on the role of the mechanism of price in the efficient functioning of the system, is very different to the NEK: for this group of authors, the functioning of the markets does not guarantee the efficient functioning of the system. Beyond these differences, a common opinion: the market does not allow an efficient functioning of the system. The break with the traditional Keynesian perspective is this significant fact; the NEK is located in a micro, individualistic perspective, in contrast to the previous Keynesian tradition, which was rather "holistic", reasoning on the economic and social system entire. Another difference should be emphasized. While previous Keynesian aware took as a "stiffness" (short-term) prices and wanted to learn the lesson, the Keynesian new seek this gradual adjustment microeconomic foundations. For many authors of the NEK, prices are "viscous" ("sticky"); the adjustment of prices to changes in quantity, far from immediate, takes time and it is this "viscosity" prices and earnings variables to be explained. Where an agreement (at least partial) with some of the concerns of the NEC, namely the macroeconomic microeconomic foundations.
May be further noted that proposed viscosities are at least as much the goods market, to the credit of the work. The functioning of the different types of market is analyzed, even if the authors claiming little or roughly the NEK did attach the same importance to phenomena of viscosity, real or nominal rigidity depending on the case. Some of them explore a different route, widely suggested by Keynes elsewhere: it is not excluded, underline, that wage and price flexibility may increase, and not to reduce instability. This appears particularly on the analysis of the problems posed by the debt. Finally, coordination problems are at the heart of many of the concerns.
Moreover, it was recognized that rational expectations are an application of the principle of rational acquisition and processing of information and the formation of expectations. It is also that the principle of ineffectiveness, impotence of the economic policy of control by the application, is not directly related to the hypothesis of rational expectations and that it should not be confusion, identification between "New classical economics" and rational expectations: if it combines rational expectations and representation "classical" economy based substantially on the natural rate hypothesis, it is not surprising that one arrives at the conclusion of type Lucas-Sargent-Wallace of impotence, the inefficiency of monetary policy in the regulation of the economy. But suppose that the agents have "Keynesian" (and non-classical) representation of the functioning of the economy; in this case, rational expectations, far from powerless policy, the make rather much more effective.
A last change must be underlined: the traditional linkage between political and monetary policy budget is being reviewed. Priority from "Keynesian" vision to fiscal policy in the economic regulation was largely beaten in the face. While the "standard Keynesianism" focused on the role and the importance of fiscal policy to stabilize the economy, this position is now regarded with great scepticism. Monetary policy is having to play a key role, even if the emphasis placed by the ECB on "inflation targeting" appears on many excessive.