Economic research paradigm of research paradigm

Evolution and Enlightenment of Keynesian Economics Research Paradigm

Paul samuelson (1998), who made a neoclassical synthesis of macroeconomics and traditional microeconomics, said: "The boundary between macroeconomics and microeconomics was once clear, but in recent years, these two sub-disciplines have gradually merged, because economists have used microeconomic tools to analyze unemployment and inflation."

1936 The publication of Keynes's general theory split western economics into microeconomics and macroeconomics, and the traditional macroeconomics research paradigm separated macroeconomics from microeconomics. In 1970s, stagflation in developed countries made economists pay more attention to the micro-foundation of macro-economy. Since 1980s, neoclassical macroeconomists have successfully created a perfect economic cycle through technical shocks in Ramsey model, a dynamic general equilibrium model, which has laid a standard research paradigm for contemporary western macroeconomics. The revival of Keynesian macroeconomics in the contemporary paradigm further proves the importance of micro-foundation to macroeconomic theory. The efforts of economists to find the micro-foundation of western macroeconomics make the integration of macroeconomics and microeconomics in theoretical research an inevitable trend in the development of contemporary western macroeconomics. Economists tend to explain macroeconomic phenomena from the behavior of economic parties at the micro level, which makes the boundary between microeconomics and macroeconomics less and less obvious.

(2) Within the unified research paradigm, it is necessary for the two schools of western macroeconomics to realize the complementarity of micro-foundations. After the dispute between neo-classical macroeconomics and neo-Keynesian macroeconomics since 1980s, it is possible for western economics to achieve a new synthesis, which requires two schools of western macroeconomics: neo-Keynesian macroeconomics and neo-classical macroeconomics, which can complement each other on a micro basis within a unified research paradigm. The real business cycle theory adopts purely abstract deduction on micro-issues, and the assumption of perfect competition makes it possible to unify the micro-foundation with a dynamic general equilibrium model. Neo-Keynesianism is closer to reality in micro-hypothesis, but its hypothesis selection and model construction are somewhat arbitrary and lack of a unified analytical framework. From their differences on the microscopic basis, we can see that they can be complementary in theory. Samuelson (1998) asserted: "After 20 years of debate, the process of synthesizing old and new theories has begun." In his view, this integration is mainly manifested in the macro-economy: the labor market and the product market are characterized by rigid wages and prices, and the price and quantity of the financial market can be quickly adjusted to adapt to economic shocks and expected changes, so that the viscosity and elasticity of prices can be unified through market segmentation, that is, the micro-foundation of Keynesianism and neoclassicism can be reconciled in the same economy. In recent years, some practical business cycle models have introduced the assumption of nominal rigidity and acknowledged the short-term impact of currency changes on output and employment. Other economists try to find some connections between the actual business cycle model and the IS-LM model. By absorbing some ideas of the IS-LM model, they replaced the IS-LM model with the actual business cycle model, making it the core content of mainstream economics. Therefore, Snowden Hewen (1999) predicted that if other important features of the real economy, such as monetary factors, price rigidity and real business cycle model, would be integrated, a kind of "neo-neoclassical synthesis" would be produced.