Putting an End to the Silent Depression : New Classical vs. New Keynesian Approach
The author compares two schools of economic theory—the New Classical economists and the New Keynesian economists—and how they address the surprising rise in unemployment during a period of economic growth that he dubs “the silent depression.” It is the opinion of this researcher that the New Keynesian school of macroeconomic thought provides the more intelligent policy options for curing the silent depression. This conclusion was reached mainly on the merit of the two macroeconomic schools as a whole. Since the assumptions that are the very heart and soul of New Classical economics are so shaky, this researcher is unable to place much faith in the accompanying theory and, as a result, does not support the policy option of watching the economy self-adjust. New Keynesian economics, on the other hand, is supported both in reality and by empirical evidence- with the notable exception of the rational expectations theory. On account of its' more realistic approach and proven theory, its' policy option of increasing public investment - especially with all the attention being given to health-care system reform - while increasing taxes in the top bracket and reducing payroll taxes on wages is likely to be more successful. Whereas this solution may not provide an end-all, cure-all solution for the silent depression, this researcher believes that the policy measure of the New Keynesians will be strong medicine that will help to reunite economic growth and prosperity. Also included is research he performed during an internship with the American Medical Association, entitled “AMA Physician Satisfaction Survey: Health System Reform.”
vi, 148 p.
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