For more than a century, neoclassical theory dominated economic thinking. Neoclassical economics is a theory based on three key assumptions: individuals have rational preferences; individuals maximize ...

Hick's theorem permits aggregation of commodities when their relative prices are fixed, but, contrary to a widely expressed view, it does not require that they be aggregated. Even where commodities ...

This paper studies the links between money, specialization, and capital accumulation in a neoclassical growth framework. For tractability, the transactions role of money is introduced through a ...

Potential output is an important concept in economics. Policymakers often use a one-sector neoclassical model to think about long-run growth, and often assume that potential output is a smooth series ...

There’s no grand theory of business—nothing comparable to the theory of relativity for physics or the theory of evolution for biology. Neoclassical economic theory is the only real contender—from a ...

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those ...