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In economics, an ideology and policy model that emphasises the importance of rigorous foundations based on microeconomics, especially rational expectations. Sometimes referred to as new classical economics, to differentiate from economics of the first modern school of economics which is considered to have been initiated by the publication of Adam Smith’s ‘The Wealth of Nations’, in 1776. The New Classical school emerged in the 1970s as a response to the failure of Keynesian economics to explain stagflation. New Classical and monetarist criticisms led by Robert Lucas, Jr. and Milton Friedman respectively forced the rethinking of Keynesian. For a while, it became the dominant school in Macroeconomics. Shareholder primacy [Expand]


Corporate Finance Institute® Neoclassical Economics