Alternative Theories of Output, Unemployment, and Inflation in Germany: 1960-1985

by Christine Sauer

Overview

by Jerome L. Stein Disenchantment with Keynesian econollics developed during the post-1968 period when the rate of growth of output declined, the rate of unemployment rose, and the rate of inflation increased in the U.S. and in other countries. This paradox, called stagflation, was inconsistent with the tenet of Keynesian economics that cyclical movemants in prices and output relative to their respective trends are positively correlated. A search occurred for a more satisfactory theory of macroeconomics which could explain the paradox of stagflation and the observed economic phenomena. The New Classical Economics (NCE) developed as the total rejection of Keynesian economics. The Keynesians claimed that their demand management policies contributed to the obsolescence of the business cycle and successfully eliminated the gap between full employment (potential) output and actusl output. The NCE argued just the opposite: the unemplo~nt rate or growth rate of real output is insensitive to systematic demand management policies [Lucas; Sargent and Wallace].

Product Details

ISBN-13:	9783540509080
Publisher:	Springer Berlin Heidelberg
Publication date:	03/08/1989
Series:	Lecture Notes in Economics and Mathematical Systems , #326
Edition description:	Softcover reprint of the original 1st ed. 1989
Pages:	206
Product dimensions:	6.69(w) x 9.61(h) x 0.02(d)

Table of Contents

I Introduction.- II The German Economy: 1960–1985.- 1. Institutional Arrangements.- 2. Twenty-Five Years of Economic Policy Making.- 3. The Performance of the German Economy: 1960–1985.- III Survey and Critique of the Literature: Empirical Studies of the German Macroeconomy.- 1. Introduction.- 2. Impulse-Theoretic Models.- 3. Monetarist, Keynesian, and Rational Expectations Models.- 4. Structural Models of Other Open Economies.- 5. Phillips Curve Studies.- 6. Causality Studies.- 7. A Critical Evaluation of Previous Studies of Germany.- IV Fixed Versus Flexible Exchange Rates in the Open Economy: Theory and Reality.- 1. Introduction.- 2. Open Economy Macroeconomics: A Synthesis View.- 3. Open Economy Macroeconomics and Reality.- V Monetarist, Keynesian, and New Classical Theories of Output, Unemployment, and Inflation in Germany: 1960–1985.- 1. Introduction.- 2. The General Theoretical Framework.- 3. Alternative Views of Unemployment, Output, and Inflation.- 4. Empirical Evidence.- 5. A “Correct” Model of the German Economy? Conclusions and Outlook.- Table Appendix to Chapter V.- Data Sources.