Monetarism & New Classical Econmics (1 janv. 1970 – 1 janv. 2000)

Description:

Monetarism
- Attributed to Nobel Prize-winning economist Milton Friedman (1912-2006)
- Changes in the money supply have major effects on output in the short run and on the price level in the long run
- Claim that the total amount of money in the economy is the main determinant of economic growth
- Monetary policy as the main focus
- Most concerned with the issue of inflation caused by too much growth of the money supply

New Classical Economics
- Attributed to Nobel Prize-winning economist Robert Lucas Jr. (born 1937)
- Emphasizes the importance of 'rational expectations' of inflation and government policy actions
- Blame inflation on the government use of expansionary fiscal policies

Both
- Share the unifying principle that government intervention prevents markets in bringing the economy back to the situation where there is full employment
- Against government intervention
- Governments should never try to manage levels of demand
- Only way for the government to promote economic growth is by using policies focused on supply and creating incentives
- A rejection of Keynesian economics
- States that government intervention is the main cause of 'sticky' prices and wages
- Advocates for the return of classical, laissez-faire economy
- Inspiration for market-based supply-side policies

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