Economics · History of thought

Schools of economics

From the mercantilists counting bullion to behavioural economists counting biases: 15 schools, what each believed, who belonged to it, and how each answered the one before.

Overview

Five centuries on one line

A school of thought is a group of economists who share a view of how the economy works and what questions matter. Schools overlap: Marshall was a neoclassical who taught Keynes, and New Keynesians borrowed their method from the new classicals they were answering. The bars show when each school was formed and how long it has lasted; tap one to jump to it.

Mercantilismc. 1500–1776 Physiocrats1750s–1770s Classical economics1776–1870s German Historical School1840s–1910s Marxian economics1848–Marginalist and neoclassical1871–Austrian school1871–Institutional economics1899–Keynesian economics1936–Development economics1943–Post-Keynesian1950s–Behavioural economics1955–Monetarism1956–1980s New classical1972–New Keynesianlate 1970s–

Three revolutions

Most of the story hangs on three breaks. 1776: Smith’s Wealth of Nations replaces the mercantile system with the market. 1871: Jevons and Menger (and Walras in 1874) move value from cost to marginal utility. 1936: Keynes’s General Theory says a market economy can stay stuck below full employment. Everything after 1936 in macroeconomics is an argument about Keynes.

The schools

Before Adam Smith

Trade, treasure and land, when economics was advice to rulers.

c. 1500–1776

Mercantilism

A nation's wealth is its stock of gold and silver, won through a surplus of exports over imports.

Wealth is bullion; trade is a contest in which one country's gain is another's loss.
Aim for a favourable balance of trade: tariffs on imported manufactures, bounties on exports, colonies as markets and suppliers.
A strong state should direct the economy to build national power.
Adam Smith named and attacked it as “the mercantile system” in Book IV of the Wealth of Nations. David Hume's price–specie flow mechanism (1752) showed why a surplus cannot last: bullion inflows raise prices and erode it.

Key figures

Thomas Mun 1571–1641

England's Treasure by Forraign Trade (published 1664)

The balance of trade as the rule of national wealth.

Jean-Baptiste Colbert 1619–1683

Finance minister to Louis XIV

State-built industry and protection in France: “Colbertism”.

In the papers. JNU 2019 asked which mercantilist ideas the classical economists attacked: that state direction was needed and that wealth is the stock of precious metals.

1750s–1770s

Physiocrats

Only land produces a surplus; let trade be free and tax land alone.

“Physiocracy” means rule of nature. In their day they were known simply as les économistes.
Only agriculture yields a net product (produit net); manufacturing and commerce are “sterile”, merely passing value on.
Quesnay's Tableau économique traced how that surplus circulates among farmers, landlords and the sterile class: the first model of the economy as a circular flow.
A single tax on land (impôt unique), since all surplus ends up as rent; and free trade in grain. “Laissez faire, laissez passer” is credited to their associate Vincent de Gournay.

Key figures

François Quesnay 1694–1774

Tableau économique (1758)

The circular flow of the net product.

A. R. J. Turgot 1727–1781

Reflections on the Formation and Distribution of Wealth (1766)

Capital and interest; an early statement of diminishing returns (1767).

Classical economics and its critics

Markets, labour and distribution; and the first great dissent.

1776–1870s

Classical economics

Self-interest, guided by competition, produces growth; the task is to explain how output is divided among wages, profit and rent.

The division of labour, limited by the extent of the market, is the source of rising productivity.
The invisible hand: individuals seeking their own gain are led to promote the public good.
Value comes from labour or the cost of production. Ricardo built rent on diminishing returns to land, and trade on comparative advantage.
Say's law: supply creates its own demand, so there can be no general glut. Money is a veil over real exchange (the quantity theory).
Marx coined the label “classical political economy”; Keynes stretched “classical” to cover Marshall and Pigou too.

Key figures

Adam Smith 1723–1790

The Wealth of Nations (1776)

Division of labour, the invisible hand, canons of taxation.

T. R. Malthus 1766–1834

An Essay on the Principle of Population (1798)

Population outruns food; he doubted Say's law.

David Ricardo 1772–1823

Principles of Political Economy and Taxation (1817)

Differential rent, comparative advantage.

J.-B. Say 1767–1832

A Treatise on Political Economy (1803)

The law of markets.

J. S. Mill 1806–1873

Principles of Political Economy (1848)

The great synthesis; the wages fund, later recanted.

In the papers. CUET 2026 matched the classical model with “price and wage flexible, full employment assumed”, and Say's law with “supply creates its own demand”.

1848–

Marxian economics

Capitalism runs on surplus value taken from labour, and its own dynamics drive it into crisis.

Takes the classical labour theory of value to its conclusion: labour power is paid its value, but produces more. The difference is surplus value, the source of profit.
Accumulation replaces workers with machines, creating a reserve army of the unemployed that holds wages down.
The rate of profit tends to fall as capital per worker rises; crises are built into the system.
History moves through modes of production (historical materialism); capitalism would give way to socialism.

Key figures

Karl Marx 1818–1883

Das Kapital, vol. I (1867)

Surplus value and the laws of motion of capitalism.

Friedrich Engels 1820–1895

The Communist Manifesto, with Marx (1848)

Edited volumes II and III of Capital.

1840s–1910s

German Historical School

There are no universal economic laws; study each nation's history and institutions.

Inductive and historical, against the abstract deduction of Ricardo.
Economic policy should serve national development: List's case for protecting infant industries.
Fought the Methodenstreit (battle over method) with Carl Menger from 1883.
Its pupils took the approach to America, where it fed institutional economics.

Key figures

Friedrich List 1789–1846

The National System of Political Economy (1841)

Infant industry protection; stages of development.

Wilhelm Roscher 1817–1894

Founder of the older historical school

Historical method in economics.

Gustav Schmoller 1838–1917

Leader of the younger historical school

Menger's opponent in the Methodenstreit.

The marginal revolution

From the cost of making a thing to its value at the margin.

1871–

Marginalist and neoclassical

Value is set at the margin by utility and scarcity; prices clear markets and allocate resources.

The marginal revolution: Jevons (1871), Menger (1871) and Walras (1874), working separately, based value on marginal utility.
Three branches: the Austrian (Menger), the Lausanne (Walras, then Pareto) and the English or Cambridge (Jevons, then Marshall and Pigou).
Marshall's Principles (1890) set out partial equilibrium: supply and demand as the two blades of a pair of scissors, elasticity, consumer surplus, the short and long period.
Walras built general equilibrium, all markets at once; Pareto defined efficiency. Clark and Wicksteed made distribution a matter of marginal products.
Thorstein Veblen coined the word “neoclassical” in 1900.

Key figures

W. S. Jevons 1835–1882

The Theory of Political Economy (1871)

Final degree of utility.

Léon Walras 1834–1910

Elements of Pure Economics (1874)

General equilibrium.

Alfred Marshall 1842–1924

Principles of Economics (1890)

Partial equilibrium, elasticity, consumer surplus.

Vilfredo Pareto 1848–1923

Manual of Political Economy (1906)

Ordinal utility, Pareto efficiency.

A. C. Pigou 1877–1959

The Economics of Welfare (1920)

Externalities and corrective taxes; the Pigou effect.

In the papers. UoH 2018: the economist associated with partial equilibrium is Marshall.

1871–

Austrian school

Value is subjective, prices carry knowledge no planner has, and cheap credit breeds booms that must bust.

Menger's subjective value and methodological individualism: explain the economy from individual choices.
Capital is a structure of roundabout production in time; interest reflects time preference (Böhm-Bawerk).
Credit expansion pushes interest below its natural rate, drawing resources into projects that cannot be completed: the Austrian theory of the cycle.
Socialist planning cannot calculate without market prices (Mises, 1920); prices pass on knowledge dispersed among millions (Hayek, 1945).

Key figures

Carl Menger 1840–1921

Principles of Economics (1871)

Subjective value; Methodenstreit.

Eugen von Böhm-Bawerk 1851–1914

Capital and Interest (1884–89)

Roundabout production, time preference.

Friedrich von Wieser 1851–1926

Natural Value (1889)

Coined the term marginal utility (Grenznutzen).

Ludwig von Mises 1881–1973

Economic Calculation in the Socialist Commonwealth (1920)

The calculation problem.

F. A. Hayek 1899–1992

The Road to Serfdom (1944)

Knowledge, spontaneous order; Nobel 1974.

In the papers. UGC NET June 2026 paired over-investment theory with Hayek.

Keynes and the debate that followed

Can a market economy stay stuck? Fifty years of answers.

1936–

Keynesian economics

Output and employment are set by effective demand, which can stay too low for years.

Effective demand, not supply, fixes output in the short run; the economy can rest at an equilibrium with involuntary unemployment.
Money wages are sticky, and cutting them would cut demand anyway.
Investment depends on the marginal efficiency of capital and on animal spirits; the multiplier spreads its changes.
Interest is the reward for parting with liquidity. In a liquidity trap monetary policy fails, so fiscal policy must act.
Hicks's IS–LM (1937) and Samuelson's neoclassical synthesis joined Keynes in the short run to the neoclassical model in the long run.

Key figures

J. M. Keynes 1883–1946

The General Theory of Employment, Interest and Money (1936)

Effective demand, liquidity preference.

R. F. Kahn 1905–1989

The Relation of Home Investment to Unemployment (1931)

The multiplier.

John Hicks 1904–1989

Mr. Keynes and the “Classics” (1937)

IS–LM. Nobel 1972.

Paul Samuelson 1915–2009

Economics (1948); Foundations (1947)

The neoclassical synthesis. Nobel 1970.

In the papers. JNU 2015: in the Keynesian view both short- and long-run Phillips curves slope down.

1950s–

Post-Keynesian

Take Keynes's uncertainty seriously: money is created by credit, and distribution drives growth.

Fundamental uncertainty: the future cannot be reduced to probabilities.
Money is endogenous: banks create it in response to demand for credit.
Prices are set as a mark-up on cost; the mark-up governs how income is split (Kalecki).
Fought the Cambridge capital controversy (1950s–60s) against Samuelson and Solow over whether aggregate capital can be measured.
Financial fragility builds up in good times (Minsky's financial instability hypothesis).

Key figures

Joan Robinson 1903–1983

The Accumulation of Capital (1956)

Led the Cambridge side of the capital controversy.

Nicholas Kaldor 1908–1986

Growth and distribution models; Kaldor's facts (1961)

Distribution-driven growth.

Michał Kalecki 1899–1970

Essays in the Theory of Economic Fluctuations (1939)

Effective demand, reached independently in 1933.

Piero Sraffa 1898–1983

Production of Commodities by Means of Commodities (1960)

A revival of the classical approach to value.

Hyman Minsky 1919–1996

Stabilizing an Unstable Economy (1986)

Financial instability hypothesis.

In the papers. CUET 2024: “money supply is demand driven and credit led” is the post-Keynesian school.

1956–1980s

Monetarism

Inflation is always and everywhere a monetary phenomenon; steady money growth beats fine-tuning.

A stable demand for money makes money the main driver of nominal income: Friedman's restatement of the quantity theory.
Money affects output in the short run but only prices in the long run; there is a natural rate of unemployment.
Policy works with long and variable lags, so discretionary fine-tuning destabilises. Grow money at a fixed rate (the k-per cent rule).
The Great Depression was a monetary failure: the Fed let the money stock fall by a third (Friedman and Schwartz).
Karl Brunner coined the word “monetarism” in 1968.

Key figures

Milton Friedman 1912–2006

A Monetary History of the United States (1963, with Anna Schwartz)

Restatement of QTM, natural rate. Nobel 1976.

Anna Schwartz 1915–2012

A Monetary History of the United States (1963)

The monetary history of the Depression.

Karl Brunner 1916–1989

The Role of Money and Monetary Policy (1968)

Named monetarism; with Allan Meltzer, the Shadow Open Market Committee.

In the papers. CUET 2024: “money supply is exogenously given” is monetarism. JNU 2015: in the monetarist view the long-run Phillips curve is vertical.

1972–

New classical

With rational expectations and clearing markets, systematic policy cannot move output.

Rational expectations (from Muth, 1961) plus continuously clearing markets, built on individual optimisation.
Only surprises move output (the Lucas supply curve). Policy people can predict is ineffective: Sargent and Wallace's policy ineffectiveness proposition (1975).
The Lucas critique (1976): models fitted under one policy fail when the policy changes.
Ricardian equivalence (Barro, 1974): debt-financed tax cuts are saved against future taxes.
Real business cycle theory (Kydland and Prescott, 1982) went further: cycles are efficient responses to real shocks, and money plays no part.

Key figures

Robert Lucas 1937–2023

Expectations and the Neutrality of Money (1972)

Rational expectations in macro; the Lucas critique. Nobel 1995.

Thomas Sargent 1943–

With Neil Wallace, policy ineffectiveness (1975)

Nobel 2011.

Robert Barro 1944–

Are Government Bonds Net Wealth? (1974)

Ricardian equivalence.

Finn Kydland and Edward Prescott 1943– ; 1940–2022

Rules rather than Discretion (1977); Time to Build (1982)

Time inconsistency; RBC. Nobel 2004.

In the papers. GATE 2025 tested the policy ineffectiveness proposition and the RBC model. JNU 2018: classical workers knew the real wage; new classical workers form a rational expectation of it.

late 1970s–

New Keynesian

Rational expectations, yes, but prices and wages adjust slowly for good microeconomic reasons, so demand matters.

Accepts rational expectations and optimisation, but adds nominal and real rigidities.
Why prices stick: menu costs (Mankiw; Akerlof and Yellen, 1985), staggered contracts (Fischer 1977, Taylor 1980) and staggered price setting (Calvo 1983).
Why wages stay above market-clearing levels: efficiency wages (Shapiro and Stiglitz, 1984).
Firms have market power, so they set prices rather than take them.
Merged with RBC methods into the new neoclassical synthesis behind today's central-bank models and inflation targeting.

Key figures

N. Gregory Mankiw 1958–

Small Menu Costs and Large Business Cycles (1985)

Menu costs.

George Akerlof 1940–

With Janet Yellen, near-rational price setting (1985)

Nobel 2001.

John Taylor 1946–

Staggered wage contracts (1980); the Taylor rule (1993)

Rules for monetary policy.

Joseph Stiglitz 1943–

With Carl Shapiro, efficiency wages (1984)

Nobel 2001.

Beyond the mainstream

Institutions, psychology and the problems of poor countries.

1899–

Institutional economics

Economies are shaped by institutions, habits and law, which evolve; study them, not an abstract rational man.

The old institutionalists (Veblen, Commons, Mitchell) rejected the “hedonistic” rational agent and studied habits, law and evolution.
Mitchell measured business cycles empirically; he was a founder of the NBER (1920).
New institutional economics asks why institutions exist: firms arise to save transaction costs (Coase, 1937).
Institutions, the rules of the game, explain long-run performance (North); governance of contracts (Williamson).

Key figures

Thorstein Veblen 1857–1929

The Theory of the Leisure Class (1899)

Conspicuous consumption; coined “neoclassical”.

John R. Commons 1862–1945

Institutional Economics (1934)

Law and collective action.

Wesley Mitchell 1874–1948

Business Cycles (1913)

Empirical cycle research.

Ronald Coase 1910–2013

The Nature of the Firm (1937)

Transaction costs. Nobel 1991.

Douglass North 1920–2015

Institutions, Institutional Change and Economic Performance (1990)

Nobel 1993.

1955–

Behavioural economics

People are not the calculating optimisers of the textbook, and the errors are systematic enough to model.

Bounded rationality: people satisfice rather than optimise (Simon, 1955).
Heuristics and biases; prospect theory, with its reference points and loss aversion (Kahneman and Tversky, 1979).
Mental accounting, the endowment effect and present bias (Thaler).
Nudges: changing defaults and framing to steer choices while leaving them free.

Key figures

Herbert Simon 1916–2001

A Behavioral Model of Rational Choice (1955)

Bounded rationality. Nobel 1978.

Daniel Kahneman 1934–2024

Prospect Theory, with Amos Tversky (1979)

Nobel 2002.

Richard Thaler 1945–

Nudge, with Cass Sunstein (2008)

Mental accounting. Nobel 2017.

Robert Shiller 1946–

Irrational Exuberance (2000)

Excess volatility in asset prices. Nobel 2013.

1943–

Development economics

Poor countries are not rich ones at an earlier date; they need their own theory of how to break out.

The pioneers (1940s–50s): the big push, balanced and unbalanced growth, the vicious circle, surplus labour.
Structuralism: falling terms of trade for primary exporters (Prebisch and Singer, 1950); import substitution.
Myrdal's circular and cumulative causation: markets widen regional gaps.
Sen's capability approach moved the goal from income to freedom.
Since the 2000s, randomised trials to test what works (Banerjee, Duflo and Kremer, Nobel 2019).

Key figures

Paul Rosenstein-Rodan 1902–1985

Problems of Industrialisation of Eastern and South-Eastern Europe (1943)

The big push.

Ragnar Nurkse 1907–1959

Problems of Capital Formation in Underdeveloped Countries (1953)

Vicious circle; balanced growth.

W. Arthur Lewis 1915–1991

Economic Development with Unlimited Supplies of Labour (1954)

Dual-sector model. Nobel 1979.

Albert Hirschman 1915–2012

The Strategy of Economic Development (1958)

Unbalanced growth, linkages.

Gunnar Myrdal 1898–1987

Asian Drama (1968)

Cumulative causation. Nobel 1974.

Amartya Sen 1933–

Development as Freedom (1999)

Capabilities, entitlements. Nobel 1998.

Watch out for

The mistakes examiners are fishing for

“Classical” means two things. For Marx it meant Smith to Ricardo. Keynes used it for everyone who accepted Say’s law, Marshall and Pigou included. A question about “the classical model” in macro means flexible wages and prices at full employment.
Neoclassical, new classical, neo-Keynesian, New Keynesian are four different things. Neoclassical is the marginalist tradition from 1871. New classical is Lucas and Sargent in the 1970s. Neo-Keynesian usually means the Hicks–Samuelson synthesis, though some books use it for the Cambridge post-Keynesians. New Keynesian is the sticky-price school of the 1980s. CUET 2024 printed “neo-classical school” against rational expectations, meaning new classical.
Monetarists and new classicals both reject fine-tuning, for different reasons. Monetarists: lags are long and variable. New classicals: rational agents see systematic policy coming.
Post-Keynesian is not New Keynesian. Post-Keynesians reject the rational-expectations framework entirely and treat money as endogenous.

Macroeconomics

The macro debate, step by step

Read in order, the macro schools form a single argument about two questions: does the economy fix itself, and can policy help? Each step below answers the one before it.

1776–1848
Classical economics
Markets clear. Say's law rules out a general glut; money only sets the price level.
1936
Keynesian economics
Demand can fall short and stay short. Unemployment can be involuntary and lasting; government should fill the gap.
Against: Say's law and wage flexibility
1937–1960s
Keynesian economics
The neoclassical synthesis: Keynes in the short run (IS–LM), the classics in the long run. A stable Phillips curve offers a menu of inflation and unemployment.
1956–1968
Monetarism
Money matters most, fine-tuning destabilises, and there is no long-run trade-off: the Phillips curve is vertical at the natural rate.
Against: Fiscal activism and the exploitable Phillips curve
1970s
New classical
With rational expectations, even the short-run trade-off vanishes for any policy people can predict. The stagflation of the 1970s, which the old Phillips curve could not explain, gave them their opening.
Against: Adaptive expectations and slow learning
1982
New classical
Real business cycles: fluctuations are the economy's efficient response to technology shocks.
Against: Any role for money or demand
1980s
New Keynesian
Keep rational expectations, but explain why prices stick. Demand, and monetary policy, matter again in the short run.
Against: Continuous market clearing
1990s–
New Keynesian
The new neoclassical synthesis: optimising models with sticky prices, used by central banks targeting inflation with interest-rate rules.

Interactive

Compare them on one question

Left alone, does the economy return to full employment?

Classical economics1776–1870s

Yes. Flexible wages and prices restore full employment; Say's law rules out a general glut.

Marxian economics1848–

No. Crises and unemployment are built into capitalism.

Marginalist and neoclassical1871–

Yes. Prices clear markets; unemployment reflects wages held above equilibrium.

Austrian school1871–

Yes, if left alone; recessions are the cure for the malinvestment of the boom.

Keynesian economics1936–

No, not reliably. The economy can stay below full employment for long periods.

Post-Keynesian1950s–

No. Demand leads and uncertainty can keep it low.

Monetarism1956–1980s

Yes, in the long run: the economy tends to the natural rate.

New classical1972–

Yes, continuously.

New Keynesianlate 1970s–

Eventually, but slowly: sticky prices and wages delay the return.

Development economics1943–

Not in poor economies: coordination failures and vicious circles need a push.

Reference

Economists and their schools

Everyone named above, in order of birth. Switch on the self-test to hide the school and see if you can place each name.

Test yourself: hide the schools

Thomas Mun1571–1641
England's Treasure by Forraign Trade (published 1664)
Mercantilism
Jean-Baptiste Colbert1619–1683
Finance minister to Louis XIV
Mercantilism
François Quesnay1694–1774
Tableau économique (1758)
Physiocrats
Adam Smith1723–1790
The Wealth of Nations (1776)
Classical economics
A. R. J. Turgot1727–1781
Reflections on the Formation and Distribution of Wealth (1766)
Physiocrats
T. R. Malthus1766–1834
An Essay on the Principle of Population (1798)
Classical economics
J.-B. Say1767–1832
A Treatise on Political Economy (1803)
Classical economics
David Ricardo1772–1823
Principles of Political Economy and Taxation (1817)
Classical economics
Friedrich List1789–1846
The National System of Political Economy (1841)
German Historical School
J. S. Mill1806–1873
Principles of Political Economy (1848)
Classical economics
Wilhelm Roscher1817–1894
Founder of the older historical school
German Historical School
Karl Marx1818–1883
Das Kapital, vol. I (1867)
Marxian economics
Friedrich Engels1820–1895
The Communist Manifesto, with Marx (1848)
Marxian economics
Léon Walras1834–1910
Elements of Pure Economics (1874)
Marginalist and neoclassical
W. S. Jevons1835–1882
The Theory of Political Economy (1871)
Marginalist and neoclassical
Gustav Schmoller1838–1917
Leader of the younger historical school
German Historical School
Carl Menger1840–1921
Principles of Economics (1871)
Austrian school
Alfred Marshall1842–1924
Principles of Economics (1890)
Marginalist and neoclassical
Vilfredo Pareto1848–1923
Manual of Political Economy (1906)
Marginalist and neoclassical
Eugen von Böhm-Bawerk1851–1914
Capital and Interest (1884–89)
Austrian school
Friedrich von Wieser1851–1926
Natural Value (1889)
Austrian school
Thorstein Veblen1857–1929
The Theory of the Leisure Class (1899)
Institutional economics
John R. Commons1862–1945
Institutional Economics (1934)
Institutional economics
Wesley Mitchell1874–1948
Business Cycles (1913)
Institutional economics
A. C. Pigou1877–1959
The Economics of Welfare (1920)
Marginalist and neoclassical
Ludwig von Mises1881–1973
Economic Calculation in the Socialist Commonwealth (1920)
Austrian school
J. M. Keynes1883–1946
The General Theory of Employment, Interest and Money (1936)
Keynesian economics
Piero Sraffa1898–1983
Production of Commodities by Means of Commodities (1960)
Post-Keynesian
Gunnar Myrdal1898–1987
Asian Drama (1968)
Development economics
F. A. Hayek1899–1992
The Road to Serfdom (1944)
Austrian school
Michał Kalecki1899–1970
Essays in the Theory of Economic Fluctuations (1939)
Post-Keynesian
Paul Rosenstein-Rodan1902–1985
Problems of Industrialisation of Eastern and South-Eastern Europe (1943)
Development economics
Joan Robinson1903–1983
The Accumulation of Capital (1956)
Post-Keynesian
John Hicks1904–1989
Mr. Keynes and the “Classics” (1937)
Keynesian economics
R. F. Kahn1905–1989
The Relation of Home Investment to Unemployment (1931)
Keynesian economics
Ragnar Nurkse1907–1959
Problems of Capital Formation in Underdeveloped Countries (1953)
Development economics
Nicholas Kaldor1908–1986
Growth and distribution models; Kaldor's facts (1961)
Post-Keynesian
Ronald Coase1910–2013
The Nature of the Firm (1937)
Institutional economics
Milton Friedman1912–2006
A Monetary History of the United States (1963, with Anna Schwartz)
Monetarism
Paul Samuelson1915–2009
Economics (1948); Foundations (1947)
Keynesian economics
Anna Schwartz1915–2012
A Monetary History of the United States (1963)
Monetarism
W. Arthur Lewis1915–1991
Economic Development with Unlimited Supplies of Labour (1954)
Development economics
Albert Hirschman1915–2012
The Strategy of Economic Development (1958)
Development economics
Karl Brunner1916–1989
The Role of Money and Monetary Policy (1968)
Monetarism
Herbert Simon1916–2001
A Behavioral Model of Rational Choice (1955)
Behavioural economics
Hyman Minsky1919–1996
Stabilizing an Unstable Economy (1986)
Post-Keynesian
Douglass North1920–2015
Institutions, Institutional Change and Economic Performance (1990)
Institutional economics
Amartya Sen1933–
Development as Freedom (1999)
Development economics
Daniel Kahneman1934–2024
Prospect Theory, with Amos Tversky (1979)
Behavioural economics
Robert Lucas1937–2023
Expectations and the Neutrality of Money (1972)
New classical
George Akerlof1940–
With Janet Yellen, near-rational price setting (1985)
New Keynesian
Thomas Sargent1943–
With Neil Wallace, policy ineffectiveness (1975)
New classical
Finn Kydland and Edward Prescott1943– ; 1940–2022
Rules rather than Discretion (1977); Time to Build (1982)
New classical
Joseph Stiglitz1943–
With Carl Shapiro, efficiency wages (1984)
New Keynesian
Robert Barro1944–
Are Government Bonds Net Wealth? (1974)
New classical
Richard Thaler1945–
Nudge, with Cass Sunstein (2008)
Behavioural economics
John Taylor1946–
Staggered wage contracts (1980); the Taylor rule (1993)
New Keynesian
Robert Shiller1946–
Irrational Exuberance (2000)
Behavioural economics
N. Gregory Mankiw1958–
Small Menu Costs and Large Business Cycles (1985)
New Keynesian

Practice

Check yourself

0 of 8 correct so far

Schools and their ideas

1Match: A. Money supply is exogenously given B. Money supply is demand driven and credit led C. Rational expectations D. Supply creates its own demand — with I. Post-Keynesian II. Say's law III. Monetarism IV. New classical

2The physiocrats held that the only productive sector, the only one yielding a net product, is:

3Which of these did the classical economists attack in mercantilism? A. State direction of the economy was necessary B. Money had no intrinsic value C. National wealth is the stock of precious metals

4In the monetarist view, the long-run Phillips curve is:

5The policy ineffectiveness proposition belongs to:

6Menu costs, staggered contracts and efficiency wages are explanations offered by:

7Which three economists launched the marginal revolution in the early 1870s?

8Arrange from oldest to latest: A. Keynesian theory of the demand for money B. Fisher's quantity theory C. Cambridge cash-balance approach D. Friedman's modern quantity theory

Try it on real questions

Fourteen past-paper questions on schools of thought

From JNU, CUET-PG, GATE and the University of Hyderabad: mercantilism against the classics, Say's law, monetarism, new classical policy ineffectiveness and the post-Keynesian view of money.

These are questions from the TestStop bank. A free account answers 10 a day, each with its worked solution; All-Access opens every set with no daily limit.

Practice these →More resources →

Schools of economics

Five centuries on one line

The schools

Before Adam Smith

Classical economics and its critics

The marginal revolution

Keynes and the debate that followed

Beyond the mainstream

The mistakes examiners are fishing for

The macro debate, step by step

Compare them on one question

Economists and their schools

Check yourself

Schools and their ideas

Fourteen past-paper questions on schools of thought

Read next

Schools of economics

Five centuries on one line

The schools

Before Adam Smith

Classical economics and its critics

The marginal revolution

Keynes and the debate that followed

Beyond the mainstream

The mistakes examiners are fishing for

The macro debate, step by step

Compare them on one question

Economists and their schools

Check yourself

Schools and their ideas

Fourteen past-paper questions on schools of thought

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