Macroeconomics

The neo-classical synthesis is a synthesis of the classical model and the Keynesian model. In short, it states that the Keynesian model is correct in the short run while the classical analysis is correct in the long run. Let us consider a concrete example. According to the Keynesian model, an increase in G will increase Y and reduce unemployment.

In describing these trends, we have been asked several times what the nature of the market failure is. The answer seems fairly clear. There is no major market failure in the way economists normally use the term.

Multinationals, businesses that operate in the global economy, and those who have a role in creating and managing global supply chains are good at what they do and getting better all the time. They are knowledgeable about doing business in multiple national environments (an important capability).

In the postcrisis environment, issues of sustainability in the trajectory of the U.S. economy have come to the fore. Among the problems pointed to are a large current account deficit, the paucity of household savings, overleveraging in the financial and household sectors, and stagnation of middleclass incomes.

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