The New Classical Explanation of the Stagflation: A Psychological Way of Thinking

Aurélien Goutsmedt (1)

1 CES - Centre d'économie de la Sorbonne

The stagflation phenomenon is regarded as one of the cause of the Keynesian paradigm breakdown in the 1970s. The New Classical school took advantage of this breakdown. However, its discourse on the stagflation was not so clear and remained in a implicit shape. The paper aim at rebuilding the New Classical tale of the stagflation that stroke the United-States economy in the 1970s. We show that psychological ideas (expectations, beliefs, credibility) lay in the heart of the explanation. In the same time, oil shocks were left in the background. Besides, the New Classical school put much more emphasis on the inflation issue and experienced some difficulties to deal with the increase in unemployment.

Mots clés: History of Macroeconomics; Macroeconomics; New Classical School; Stagflation

Domaines: Economies et finances

Aurélien Goutsmedt. The New Classical Explanation of the Stagflation: A Psychological Way of Thinking. 2016. ⟨halshs-01281962⟩