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new classical economics (B2)<br />A modem US and UK school of economics combining the use of the RATIONAL EXPECTATIONS hypothesis with MONETARISM and a LAISSEZ-FA!RE approach to economic policy. All markets are assumed to be perfectly competitive in their behaviour and all unemployment is voluntary because it arises only when employers and employees make mistakes. Central to this technically sophisticated theory is the belief that markets clear. The principal proponents of these views in the USA are LUCAS and Thomas Sargent; in the UK, Patrick Minford and Michael Beenstock.<br /><em>See also:</em> perfect competition <br /><em>Reference</em><br />Buiter, W.H. (1980) 'The macroeconomics of Dr Pangloss: a critical survey of the new classical macroeconomics', Economic Journal90: 34-50.<br /> Hoover, K.D. (1988) The New Classical Economics, Oxford: Basil Blackwell.
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