The Neoclassical Synthesis

Many economists, soon after the publication of the General Theory (1936), set out to formulate and, at the same time, to clarify the difficult and often challenging content of the book. Among the first models that were specified was that of Hicks (1937, 1983), which was to constitute the backbone of what today came to be known as macroeconomics. In this chapter, we present and evaluate the Hicksian IS–LM model and continue with Keynes’s reaction to the Hicksian restatement of the General Theory. Next, we introduce Modigliani’s version of the Keynesian model, and the chapter ends with a summary and some concluding remarks.