keynesianWhat is the difference between traditional Keynesian and new Keynesian economics? What is the difference between old classical and new classical economics?

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litteacher8's profile pic

litteacher8 | High School Teacher | (Level 3) Distinguished Educator

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Classical economics focuses on a free system, where there is no interference in the free market. Supply and demand meet at an equilibrium and everything works on its own. Keynesian economics, on the other hand, suggests that it is important for government to take an active role to keep the economy healthy.
enotechris's profile pic

enotechris | College Teacher | (Level 2) Senior Educator

Posted on

There appears to be "classical", "new classical", and "neo classical" economics.

Classical considers that competition leads to the most efficient use of resources and that supply and demand are regulated through market forces.

Neo classical, like classical, considers all the aforementioned points, but differs in considering that savings drives investment, not vice-versa,

New classical considers the circulating money supply, tax cuts, and minimal government fiscal regulation to be key economic factors.

 

http://www.businessdictionary.com/definition/new-classical-economics.html

accessteacher's profile pic

accessteacher | High School Teacher | (Level 3) Distinguished Educator

Posted on

Yes, the key development (rather than difference) between new and traditional Keynesian approaches to economics is that there is a shift from macro to microeconomics in its justification of its economic theories and position. There is no central difference, rather just a shift in the means used to support it.

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The main differences between these two sets of "new" and "traditional" views is that the new ones are more interested in microeconomics while the traditional ones are more macro.  The new versions do not really disagree with the old ones.  Instead, they are trying to bring microeconomic rigor to bear to explain why and how the old versions are right.

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