History of Economics: Ancient Greece Roman Empire

History of Economics
1000 BC 0 1000 2000 3000
Eras
Ancient Greece
Roman Empire
Industrial Revolution
The Marginal Revolution
World War I
Black Tuesday
The Great Depression
World War II
Lehman Brothers Collapsed
Today
Schools
Physiocrats
Classical School
Pre-Marginalists
Neoclassical Economist
The Marginalists
Austrian School
American Insitutionalist
Keynesian Economists
New Classical Economists
New-Keynesian Economits
Economists
Xenophon
Plato
Aristotle
Petty, William
Quesnay, Francois
Cantillon, Richard
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Smith, Adam
Tourgot, Anne
Bentham, Jeremy
Mill, James
Malthus, Thomas
Say, Jean-Bapiste
Ricardo, David
von Thünen, Johann Hermann
Cournot, Antoine Augustin
Dupuit, Arsène Jules Étienne
Mill, John Stuart
Gossen, Hermann Heinrich
Marx, Carl
Walras, Leon
Jevons, William S.
Menger, Carl
Marshall, Alfred
Edgeworth, Francis Ysidro
Pareto, Wilfed
Wicksell, Knut
von Bawerk-Böhm, Eugen
von Weiser, Freidrich
Veblen, Thorstein
Fisher, Irving
Slutsky, Evgeny E.
Keynes, John Maynard
Fricsh, Ragnar
Ohlin, Bertil
Hicks, John R.
Haavelmo, Trygve
Freidman, Milton
Samuelson, Paul
Modigliani, Franco

Arrow, Kenneth
Solow, Robert
Lucas, Robert
Prescott, Edward
Kydland, Finn
Stiglitz, Joseph
Krugman, Paul
Works
Tableau Economique
"The Wealth of Nations"
An Essay on the Principles of Population
Theory of Wealth
Principles - The Principles of Political Economy
"The Theory of Political Economy"
Mathematical Psychics
Principles of Economics
On the theory of the budget of the consumer
The Treatise on Money
The General Theory of Employment, Interest and Money
Value and Capital
The Probability Approach in Econometrics
Economics: An Introductionary Analysis
Lucas Critique

Eras
Ancient Greece
600 bc - 200 bc
Roman Empire
27 BC - 476
Industrial Revolution The Industrial Revolution is one of the most significant changes in recent
1760 - 1830 human history. The transition included people moving from countryside to
larger cities, going from hand production to the use of machines,
increased use of steam power and going from wood and other bio-fuels to
the use of coal. For the first time in recent history the living standard of the
masses of ordinary people began experienced a sustainable growth.
The classical school was largely influenced by the industrial revolution and
thus influenced economics.

The Marginal Revolution There are four main reasons for this period being called the Marginal
1865 - 1880 Revolution.
First, during the late nineteenth century much of the focus in economics
turned from the classical long-term development, that is the theory of
population, welfare and growth, towards shorter terms. The use of capital
and labour in production, the choices of the consumer and utility became
important subjects. As hinted by the phrasing «the Marginal Revolution»,
the theory of decisions made at the margin was much studied and strongly
influenced future economics. This goes especially for the theory of
marginal utility.
Second, the use of mathematics became more and more common, though
Jevons did not particularly contribute to this development. Walras was the
major contributor on this field. As mentioned earlier, von Thünen, Cournot
and some others began this way of looking at economics some years
before Jevons’ time, but the majority did not. However, in the 1870's,
largely due to the major advances in natural science, the general view in
economics took a more mathematical approach.
More than the pioneers mentioned earlier, Jevons, Menger and Walras
incorporated these new theories into a system. And perhaps more
importantly, more than earlier these thoughts gained acceptance among
the scientific environment. Although both Walras and Menger wrote
important works in the field of marginal utility and the use mathematics in
economics, Jevons developed his theories rather individually.
Finally, the generation of economist including Jevons was, as mentioned
earlier, among the first to have a formal education in economics. Thus the
scientific field gradually turned towards being a profession, which is rather
different from earlier economists.
World War I
1914 - 1918
Black Tuesday
10/29/1929

The Great Depression The Great Depression was a severe worldwide economic depression in
10/29/1929 - 1940 the decade preceding World War II. The timing of the Great Depression
varied across nations, but in most countries it started in 1930 and lasted
until the late 1930s or middle 1940s. It was the longest, most widespread,
and deepest depression of the 20th century. The depression originated in
the U.S., after the fall in stock prices that began around September 4,
1929, and became worldwide news with the stock market crash of
October 29, 1929 (known as Black Tuesday). The Great Depression had
devastating effects in countries rich and poor. Personal income, tax
revenue, profits and prices dropped, while international trade plunged by
more than 50%. Unemployment in the U.S. rose to 25%, and in some
countries rose as high as 33%.
World War II
1939 - 1945
Lehman Brothers Collapsed Lehman Brothers Holdings Inc. was a global financial services firm. Before
09/15/2008 declaring bankruptcy in 2008, Lehman was the fourth-largest investment
bank in the US, doing business in investment banking, equity and fixed-
income sales and trading (especially U.S. Treasury securities), research,
investment management, private equity, and private banking.
Today
2013
Schools
Physiocrats Physiocracy is an economic theory developed by the Physiocrats, a group

1710 - 1765 of economists who believed that the wealth of nations was derived solely
from the value of "land agriculture" or "land development." Their theories
originated in France and were most popular during the second half of the
18th century. Physiocracy is perhaps the first well-developed theory of
economics.
Quesnay
Cantillon
Tourgot
Wikipedia

Classical School Classical economics is widely regarded as the first modern school of
1735 - 1860 economic thought. Its major developers include Adam Smith, Jean-
Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill.
Classical economists claimed that free markets regulate themselves,
when free of any intervention. Adam Smith referred to a so-called invisible
hand, which will move markets towards their natural equilibrium, without
requiring any outside intervention.
Pre-runner:
- Adam Smith
Ricardo
Malthus
Mill, James
Mill, John Stuart
Say
Wikipedia
Pre-Marginalists The pre-marginalist did, as the marginalists, focus upon maximization and
1800 - 1850 individual behaviour, either on the production or the demand side of the
economy. However, contrary to the marginalist, they did not achieve much
publication and fame in the scientific environment.
von Thünen
Dupuit
Cournot

Neoclassical Economist Irving Fisher introduced the term neoclassical economy in 1900, but it was
1850 - 1970 later used to include the works of also earlier writers. The term is a
umbrella term for several different schools including marginalism.
However, excluding institutional economics and Marxism.
As expressed by E. Roy Weintraub, neoclassical economics rests on three

assumptions, although certain branches of neoclassical theory may have
different approaches:
- People have rational preferences among outcomes that can be identified
and associated with a value.
- Individuals maximize utility and firms maximize profits.
- People act independently on the basis of full and relevant information.
Jevons
Menger
Walras
von Weiser
von Böhm-Bawerk
Marshall
Wicksell
Fisher
Slutsky
Pareto
Hicks
The Marginalists The Marginalists includes Jevons, Menger and Walras, who were the most
1850 - 1900 important contributors to the Marginal Revolution. They worked on the
decisions made by individuals in the economy and developed the demand
and supply curves.
The three of the began the process of making economics a profession.
Jevons
Walras
Menger

Austrian School The Austrian School of economics is a school of economic thought which
1865 - 1920 bases its study of economic phenomena on the interpretation and analysis
of the purposeful actions of individuals It derives its name from its origin in
late-19th and early-20th century Vienna with the work of Carl Menger,
Eugen von Böhm-Bawerk, Friedrich von Wieser, and others.
Menger
von Böhm-Bawerk
von Weiser
American Insitutionalist The ‘institutional approach’ to economics goes back to a conference

1918 - 1950 paper in 1918 by Walton Hamilton titled ‘The Institutional Approach to
Economic Theory’. The paper was a call for the profession at large to
adopt the ‘institutional approach’ and a conception of economic theory
that was:
(i) capable of giving unity to economic investigations of many different
areas;
(ii) relevant to the problem of social control;
(iii) relate to institutions as both the ‘changeable elements of economic life
and the agencies through which they are to be directed’;
(iv) concerned with ‘process’ in the form of institutional change and
development; and
(v) based on an acceptable theory of human behaviour, in harmony with
the ‘conclusions of modern social psychology’.
At its inception, then, institutionalism could be seen as a very promising
programme – modern, scientific, pointing to a critical investigation and
analysis of the existing economic system and its performance.
Institutionalism was critical of marginal utility theory as a basis for a theory
of consumption and emphasized the social nature of the formation of
consumption values.
Institutional economics after 1945

Institutionalism had a strong position in American economics in the
interwar period, but declined in prestige after WWII from mainstream of
American economics to a heterodox tradition on the margins of the
discipline.

Keynesian Economists Neo-Keynesian economics is a school of macroeconomic thought that
1945 - 1980 was developed in the post-war period from the writings of John Maynard
Keynes. A group of economists (notably John Hicks, Franco Modigliani,
and Paul Samuelson), attempted to interpret and formalize Keynes'
writings, and to synthesize it with the neo-classical models of economics.
Their work has become known as the neo-classical synthesis, and created
the models that formed the core ideas of neo-Keynesian economics.
These ideas dominated mainstream economics in the post-war period,
and formed the mainstream of macroeconomic thought in the 1950s, 60s
and 70s.
Pre-runner:
- John Maynard Keynes
Hicks
Modigliani
Samuelson
New Classical Economists New classical macroeconomics, sometimes simply called new classical
1970 - Present economics, or monetarists, is a school of thought in macroeconomics that
builds its analysis entirely on a neoclassical framework. Specifically, it
emphasizes the importance of rigorous foundations based on
microeconomics, especially rational expectations.
New classical macroeconomics strives to provide neoclassical

microeconomic foundations for macroeconomic analysis. This is in
contrast with its rival new Keynesian school that uses microfoundations
such as price stickiness and imperfect competition to generate
macroeconomic models similar to earlier, Keynesian ones.
One of the most famous new classical models is the real business cycle
model, developed by Edward C. Prescott and Finn E. Kydland.

New-Keynesian Economits New Keynesian economics is a school of contemporary macroeconomics
1991 - Present that strives to provide microeconomic foundations for Keynesian
economics. It developed partly as a response to criticisms of Keynesian
macroeconomics by adherents of New Classical macroeconomics.
Two main assumptions define the New Keynesian approach to

macroeconomics. Like the New Classical approach, New Keynesian
macroeconomic analysis usually assumes that households and firms have
rational expectations. But the two schools differ in that New Keynesian
analysis usually assumes a variety of market failures. In particular, New
Keynesians assume that there is imperfect competition[1] in price and
wage setting to help explain why prices and wages can become "sticky",
which means they do not adjust instantaneously to changes in economic
conditions.
Wage and price stickiness, and the other market failures present in New
Keynesian models, imply that the economy may fail to attain full
employment. Therefore, New Keynesians argue that macroeconomic
stabilization by the government (using fiscal policy) or by the central bank
(using monetary policy) can lead to a more efficient macroeconomic
outcome than a laissez faire policy would.
Economists
Xenophon Oikonomikos
430 bc - 355 bc
Plato The ideal state.

428 bc - 347 bc
Aristotle "Politics" and "Nicomachean Ethics"

384 bc - 322 bc
Petty, William Contributions to classical political economy in methods, concepts and

1623 - 1687 analysis. Argued for optimal taxation. A notion of surplus.
Quesnay, Francois "Tableau Economique" - circular flow of economy - and founder of

1694 - 1774 Physiocrats. Agriculture only sector that produced net surplus.

Cantillon, Richard His only work rediscovered by Jevons. Influenced by Petty. Land/Labour
1697 - 1734 theory of value. Demand/Supply determining market prices. Major
influence on Quesnay.
Smith, Adam Adam Smith is without doubt one of the most important economist
1723 - 1790 throughout history. Although most of the content in "The Wealth of
Nations" were already discussed by earlier economist Smith put together
theoretical elements in a convincing manner and appeared to be dealing
with the real world instead of theoretical aspects. He wrote on the
productive organization, the causes of economic growth, value and
distribution. His most famous theory is that of the invisible hand.
Bjerkholt Smith Note
Tourgot, Anne Realized decreasing returns in agriculture. Analysis of productive use of

1727 - 1781 capital in all sectors. Forerunner to Adam Smith. Laissez-faire.
Bentham, Jeremy Bentham was the founder of the utilitarian ethics and not an economist,
1748 - 1832 but has non the less been extremely important for the development of
economics.
Mill, James James Mill was along with Ricardo one of the founders of the classical
1763 - 1836 school. However, his contributions has been rather overshadowed by his
son, John Stuart Mill, and by his colleague Ricardo.
Malthus, Thomas Argued against economist which believed in limitless improvement of

1766 - 1834 society. Malthus placed the longer-term stability of the economy above
short-term expediency and thought that the dangers of population growth
would preclude endless progress towards a utopian society.
Say, Jean-Bapiste Say was a French economist who became most famous for the "Say Law",
1767 - 1832 stating that "supply creates its own demand". He had classical liberal
views, and argued for free trade.

Ricardo, David Ricardo demonstrated the possibilities of using the abstract method of
1772 - 1823 reasoning to formulate economic theories. Ricardo’s theorizing attracted a
band of a scholars, corroborating, amending and extending his theories.
His most important topics can be summarized to:
- The Theory of Rent
- The Labour Theory of Value
- The Distribution Problem
- The Currency Question
- Comparative Advantage
- Ricardian Equivalence
von Thünen, Johann Hermann Von Thünen (1783-1850) was an important contributor to the ideas of profit
1783 - 1850 maximization and marginal productivity. One important insight was the
idea of diminishing returns, i.e. how marginal productivity varies with
factor inputs.
The importance of going from one factor to two factors should not be
underrated, this was the major contribution by von Thünen.
The works and ideas of von Thünen was, however, not very noted in his
own time and did not get much attention before the rediscovery by
Jevons.
Cournot, Antoine Augustin Cournot (1801-1877) had unique insights in applying mathematics in
1801 - 1877 economics and social sciences and contributed in the theory of prices,
monopoly and perfect competition.
Cournot's ‘demand function’ is not a demand schedule in the modern
sense, it summarizes the empirical relationship between price and
quantity sold, rather than the conceptual relationship between price and
the quantity sought by buyers. Cournot’s function is not derived from
theories of individual behavior, he notes that the "accessory ideas of utility,
scarcity, and suitability to the needs and enjoyments of mankind...are
variable and by nature indeterminate, and consequently ill suited for the
foundation of a scientific theory" (Cournot, 1838: p.10).
Also Cournot's works was mostly recognized with the marginal
breakthrough in the 1870's.

Dupuit, Arsène Jules Étienne Dupuit made the first successful connection between marginal utility and
1804 - 1866 demand, though only on a individual level and did not make any
comments upon the aggregate. His remarkable effort at developing a
cost-benefit analysis of public works led him to draw the demand curve in
price-quantity space. Unlike Cournot, Dupuit did not rest his demand
curve on empirical intuition but rather identified the demand curve as the
marginal utility curve itself.
Mill, John Stuart Mill's work on economics were much influenced by his utilitarian views.
1806 - 1873 His early economic philosophy was one of free markets. However, he
accepted interventions in the economy, such as a tax on alcohol, if there
were sufficient utilitarian grounds. He also supported the Malthusian
theory of population. By population he meant the number of the working
class only. He was therefore concerned about the growth in number of
labourers who worked for hire. He believed that population control was
essential for improving the condition of the working class so that they
might enjoy the fruits of the technological progress and capital
accumulation. He propagated birth control as against moral restraint.
Gossen, Hermann Heinrich Gossen independently presented, in 1854, a theory where demand was
1815 - 1858 derived from the process of utility-maximizing by the consumer. However,
Gossen's work did not gain much publicity and thus were not discovered
by Jevons until after publishing «The Theory of Political Economy» in 1871.
Gossen's second law is the crucial one and often referred to nowadays
just as ‘Gossen’s Law’. The idea that, at the margin, the consumer
substitutes between goods to obtain the same marginal utility across
goods, yields the downward-sloping demand curve for each of the goods.
When the price of a good rises, the marginal utility in terms of money
(MUi/pi) declines and thus (by Gossen's first law), less of that good will be
bought.

Marx, Carl Marx held that labour power could be considered a commodity, like any
1818 - 1883 other commodity for sale, whose price could be explained in the same
way as other commodities.Marx’s labour theory of value differed from
Ricardo’s by determining the absolute value of goods and services. Use
value vs. exchange value of commodities. Exchange value determined by
the “socially necessary labour time” embodied in the commodity. Marx
was one of the first to point out that business cycle fluctuations was a
normal occurrence in capitalist economies. The class struggle leads
inevitable to the overthrow of the capitalist system and the dictatorship of
the proletariat.
Walras, Leon Walras was one of the three economist related to the Marginal Revolution,
1834 - 1910 and he was y far the one who evolved the use of mathematics in economy
the most. He formulated the "marginal theory of value", independently of
Jevons and Menger, and pioneered the development of a general
equilibrium theory.
Jevons, William S. Jevons was one of the three economists related to the Marginal
1835 - 1882 Revolution. His contribution centered mainly about utility. He argued that
utility was the reason for value and that economists should maximize
happiness, i.e. utility.He defined the final degree of utility as the additional
utility gain for the last additional commodity. From this he argued that
utility is decreasing in amount of commodity, that optimal allocation is
reached when the final degrees of utility of different uses are equal. He
did not however add a demand curve. All hos theories are worked out
independently of other economists.
Menger, Carl Menger was the third economist related to the Marginal Revolution. Also
1840 - 1921 he developed a theory of marginal utility, independently of other
economists writing on the topic. He also explained how both sides would
gain from trade.
Marshall, Alfred Alfred Marshall succeeded Ricardo and J.S. Mill as the great name of
1842 - 1924 British economics. He dominated the scene through eight editions of
"Principles of Economics" from 1890 to 1920. The 700-page book was like
a Bible for British economists and used in universities in other countries as
well. Marshall is regarded as founder of the Cambridge School of
Economics. He used the ideas of predecessors from Ricardo to Jevons
and added a number of useful tools, concepts and graphs.

Edgeworth, Francis Ysidro Edgeworth was the leading economist in Britain next to Marshall. His
1845 - 1926 innovative brilliance made him influential long after Marshall was virtually
forgotten.Edgeworth applied utilitarianism as the appropriate principle of
distributive justice through a contractarian approach. He also argued for
maximum utility as the single principle in social sciences.
Edgeworth used Lagrange multipliers and even calculus of variations,
techniques few economists were familiar with. The book was difficult to
read, because of both content and style. It was in this book that
Edgeworth introduced the generalized utility function, U(x, y, z, ...), and
drew the first indifference curves. Utility curves entered in almost
everything Edgeworth did in economics. He was the first to apply formal
mathematical techniques to individual decision making in economics.
Jevons had studied the equilbrium when all agents took prices as given,
Edgeworth was concerned with understanding how an equilibrium could
be reached among few or many agents through contracting. Such
contracting led generally to multiple possible outcomes. Edgeworth’s
achievement was to show the conditions under which competition
between buyers and sellers, through a barter process, lead to the same
point as when all agents act as price takers.
Edgeworth's attitude to taxation was similar to that of the major classical
economists (and unlike Wicksell), in rejecting a benefit approach on the
argument that taxation is not an economic bargain governed by
competition, it is about determining the distribution of taxes for common
purposes.

Pareto, Wilfed Pareto’s name is associated with general equilibrium, welfare economics
1848 - 1923 and ordinal utility. He was a forerunner of the axiomatic approach
culminating with the Arrow–Debreu model. The impact of Pareto’s work
was not immediate and to begin with confined to Italy and France.Pareto
was preoccupied by the idea of the economy as a complete system and
by the interaction between the various parts of the economy, in line with
Walras’ thinking and far from the partial equilibrium analysis of Marshall.
One of Pareto's major contributions was to establish that an ordinal notion
of utility is sufficient for the construction of equilibrium theory. Few have
studied general equilibrium theory without learning about the Edgeworth
box. Despite the name, this graphical representation first appeared in
Pareto’s Manuale, where it was used to motivate the attempted proofs of
the welfare theorems in the general case. Pareto provided the standard
equilibrium conditions for the consumer side of economy, with the
marginal rate of substitution equal to the price ratio. Of all Pareto's
contributions it is ‘Pareto optimality’ that has made the greatest impact.
Yet, it was not Pareto who first gave a definition of this concept, as
Edgeworth in 1881 had defined a situation in which the utility of each
individual is maximized given the utilities of all others. Pareto had the
insight that this notion of efficiency was independent of all institutional
arrangements and distributional considerations. Pareto went on to
establish the first theorem of welfare economics, i.e. a competitive
equilibrium is a Pareto optimum and a tentative version of the second
theorem, that any Pareto optimum can be obtained as a competitive
equilibrium from an appropriate distribution of initial resources.

Wicksell, Knut Wicksell’s influence on modern economic thought has been profound and
1851 - 1926 far-reaching. It is noticable not least in the discussion of saving and
investment that preceded the Keynesian breakthrough, in Hayeks’s
overinvestment theory of the business cycle emphasizing the notions of
capital shortage and forced saving, in Schumpeter’s theory of economic
development, in Frisch’s dynamic theory of the busines cycles , and
overwhelmingly in Swedish economic thought. Wicksell’s use of
mathematics, although often somewhat hidden by literary form of
presentation, set an important precedent. Wicksell developed the
marginal productivity theory of distribution, integrating it with the theory of
capital and interest. His claim to fame today rests much on his contribution
to monetary theory, based on the notion of monetary equilibrium and the
distinction between the actual rate of interest and the “natural” one.
Wicksell’s third contribution is his celebrated feedback policy rule, under

which the central bank stabilizes the price level by adjusting its interest
rate in response to price level deviations from target, stopping only when
prices converge to target. A precursor of the modern Taylor rule,
Wicksell’s rule is the prototype of all feedback policy rules discussed in
the monetary literature today.
von Bawerk-Böhm, Eugen Böhm-Bawerk is particularly well know for his ‘three reasons’ for interest,
1851 - 1914 which may be viewed as BB’s personal contribution ot the Austrian
economics. 26
von Weiser, Freidrich Wieser's two main contributions are the theory of "imputation",
1851 - 1926 establishing that factor prices are determined by output prices (reversing
the Classicals) and the theory of "alternative cost" or "opportunity cost" as
the foundation of value theory. These became fundamental "subjectivist"
pillars in neoclassical theory. Wieser can be credited with turning
neoclassical economics firmly towards the study of scarcity and resource
allocation - a fixed quantity of resources and unlimited wants - all based on
the principle of marginal utility.

Veblen, Thorstein Veblen was primarily an economist who wrote extensively
1857 - 1929 on methodological issues. Veblen believed that technological
developments would eventually lead toward a socialistic organization of
economic affairs, but his views regarding
socialism and the nature of the evolutionary process of economics
differed sharply from those of Marx. While Marx saw socialism as the
ultimate goal for civilization and the working-class as the group that would
establish it, Veblen saw socialism more as an intermediate phase in an
ongoing evolutionary
process in society that would be brought about by the natural decay of the
business enterprise system and by the inventiveness of engineers.
Fisher, Irving Irving Fisher is (according to James Tobin) the greatest economist
1867 - 1947 America has produced. He made seminal and durable contributions on a
wide range of economic science. Strongly promoting mathematical
economics (with Cournot
as his great hero). Much of standard neoclassical theory today is Fisherian
in origin, spirit and substance. Most modern models of capital and interest
are essentially variations on Fisher's theme, the conjunction of
intertemporal choices and
opportunities. Fisher’s theory of money and prices is the foundation for
much of contemporary monetary economics. Fisher was deeply involved
with quantitative empirical research, index numbers and their properties
(on which
he was a world authority), and other early econometric approaches.
Fisher's ideas have frequently been rediscovered by others, e.g.
distributed lag regression, life cycle saving theory, the ‘Phillips curve’,
‘consumption tax’ rather than ‘income tax’, the modern quantity theory of
money, real vs. nominal interest rates, and many other standard tools in
economists’ kits. Fisher was not fully appreciated by his contemporaries,
partly because he was far ahead of
others, partly due to the reputation he lost.
Slutsky, Evgeny E. Slutsky was a mathematician, statistician and economist, known in

1880 - 1948 economics mainly for the 1915 article, which was unnoticed until the mid-
1930s but influenced the further development of consumer theory.
Building on earlier work by Pareto, Slutsky showed that the effect of a
price change on the quantity demanded can be divided into two effects,
which we are familiar with as the Slutsky equation.

Keynes, John Maynard John Maynard Keynes was a British economist whose ideas have
1883 - 1946 fundamentally affected the theory and practice of modern
macroeconomics, and informed the economic policies of governments. He
built on and greatly refined earlier work on the causes of business cycles,
and is widely considered to be one of the founders of modern
macroeconomics and the most influential economist of the 20th century.
His ideas are the basis for the school of thought known as Keynesian
economics, as well as its various offshoots. In many ways, subsequent
developments in 20th century economics can be viewed as either
building on Keynes' ideas or reacting against them.
In the 1930s, Keynes spearheaded a revolution in economic thinking,
overturning the older ideas of neoclassical economics that held that free
markets would, in the short to medium term, automatically provide full
employment, as long as workers were flexible in their wage demands.
Keynes instead argued that aggregate demand determined the overall
level of economic activity, and that inadequate aggregate demand could
lead to prolonged periods of high unemployment. He advocated the use
of fiscal and monetary measures to mitigate the adverse effects of
economic recessions and depressions. Following the outbreak of the
Second World War, Keynes's ideas concerning economic policy were
adopted by leading Western economies.Keynes died in 1946, but during
the 1950s and 1960s the success of Keynesian economics resulted in
almost all capitalist governments adopting its policy recommendations.
Fricsh, Ragnar Frisch defined Econometrics with the following statement; “Intermediate
1895 - 1973 between mathematics, statistics, and economics, we find a new discipline
which, for lack of a better name, may be called econometrics.
Econometrics has as its aim to subject abstract laws of theoretical political
economy or "pure" economics to experimental and numerical verification,
and thus to turn pure economics, as far as possible, into a science in the
strict sense of the word.”
Bjerkholt Notes
Ohlin, Bertil Olin's name lives on in one of the standard mathematical model of
1899 - 1979 international free trade, the Heckscher–Ohlin model, which he developed
together with Eli Heckscher.

Hicks, John R. Hicks may have been close to being in the last generation of economists
1904 - 1989 who could take up almost any theoretical problem.
The most familiar of his many contributions in the field of economics were
his statement of consumer demand theory in microeconomics, and the
IS/LM model (1937), which summarised a Keynesian view of
macroeconomics. His powerful and original mind first made its mark on
what is now called microeconomics and in welfare economics. Hicks’ best-
known work, Value and Capital (1939), goes beyond microeconomics to
offer economic dynamics and discussion of monetary theory which
reaches into macroeconomics. Value and Capital is a work very rich in
ideas and a short account cannot do it justice. It showed that the basic
results of consumer theory could be obtained from ordinal utility; it
expounded what became known as the ‘Hicksian substitution effect’,
obtained by varying income as relative prices changed so as to maintain
an index of utility constant
Haavelmo, Trygve In 1989 Haavelmo was awarded the Nobel Memorial Prize in Economics
1911 - 1999 for ‘his clarification of the probability theory foundations of econometrics
and his analyses of simultaneous economic structures’. It is hardly an
exaggeration to denote the Probability Approach as the greatest
landmark in the history of econometrics.
Freidman, Milton He theorized there existed a "natural" rate of unemployment, and argued
1912 - 2006 that governments could increase employment above this rate (e.g., by
increasing aggregate demand) only at the risk of causing inflation to
accelerate. He argued that the Phillips curve was not stable and predicted
what would come to be known as stagflation. Milton Friedman's works
include many monographs, books, scholarly articles, papers, magazine
columns, television programs, videos, and lectures, and cover a broad
range of topics of microeconomics, macroeconomics, economic history,
and public policy issues.
Samuelson, Paul Samuelson is considered to be one of the founders of neo-Keynesian

1915 - 2009 economics and a seminal figure in the development of neoclassical
economics. He was also essential in creating the Neoclassical synthesis,
which incorporated Keynesian and neoclassical principles and still
dominates current mainstream economics.

Modigliani, Franco Modigliani made two path-breaking contributions to economic science:
1918 - 2003 Along with Merton Miller, he formulated the important Modigliani–Miller
theorem in corporate finance. This theorem demonstrated that under
certain assumptions, the value of a firm is not affected by whether it is
financed by equity (selling shares) or debt (borrowing money).
He was also the originator of the life-cycle hypothesis, which attempts to
explain the level of saving in the economy. Modigliani proposed that
consumers would aim for a stable level of consumption throughout their
lifetime, for example by saving during their working years and spending
during their retirement.
Arrow, Kenneth In economics, he is considered an important figure in post-World War II

1921 - Present neo-classical economic theory. Many of his former graduate students
have gone on to win the Nobel Memorial Prize themselves. Arrow's impact
on the economics profession has been tremendous. For more than fifty
years he has been one of the most influential of all practicing economists.
His most significant works are his contributions to social choice theory,
notably "Arrow's impossibility theorem", and his work on general
equilibrium analysis. He has also provided foundational work in many
other areas of economics, including endogenous growth theory and the
economics of information.
Working with Gérard Debreu, Arrow produced the first rigorous proof of
the existence of a market clearing equilibrium, given certain restrictive
assumptions. For this work and his other contributions, Debreu won the
Nobel prize in 1983. Arrow went on to extend the model and its analysis to
include uncertainty, the stability of equilibria, and whether a competitive
equilibrium is efficient.
Solow, Robert Robert Merton Solow is an American economist particularly known for his
1924 - Present work on the theory of economic growth that culminated in the exogenous
growth model named after him.

Lucas, Robert One of the most influential economists since the 1970s, he challenged the
1937 - Present foundations of macroeconomic theory (previously dominated by the
Keynesian economics approach), arguing that a macroeconomic model
should be built as an aggregated version of microeconomic models (while
noting that aggregation in the theoretical sense may not be possible
within a given model). He developed the "Lucas critique" of economic
policymaking, which holds that relationships that appear to hold in the
economy, such as an apparent relationship between inflation and
unemployment, could change in response to changes in economic policy.
This led to the development of New Keynesian economics and the drive
towards microeconomic foundations for macroeconomic theory.
Lucas is also well known for his investigations into the implications of the
assumption of rational expectations. He developed a theory of supply that
suggests people can be tricked by unsystematic monetary policy; the
Lucas-Uzawa model (with Hirofumi Uzawa) of human capital accumulation;
and the "Lucas paradox", which considers why more capital does not flow
from developed countries to developing countries. He also contributed
foundational contributions to behavioral economics, and has provided the
intellectual foundation that enables us to understand deviations from the
law of one price based on the irrationality of investors.

Prescott, Edward Edward Prescott and Finn Kydland Nobel prize for economics was based
1940 - Present on two papers Prescott and Kydland wrote. In the first paper, written in
1977 "Rules Rather than Discretion: : The inconsistency of optimal
planning" Prescott and Kydland argue that purpose and goals of economic
planning and policy is to trigger a desired response from the economy.
However, Prescott and Kydland realized that these sectors are made up of
individuals, individuals who make assumptions and predictions about the
future. As Prescott and Kydland stated “Even if there is a fixed and agreed
upon social objective function and policy makers know the timing and
magnitude of the effects of their actions… correct evaluation of the end-of-
point position does not result in the social objective being maximized.”
Prescott and Kyland were pointing out that agents in the economy already
factor into their decision making the assumed response by policy makers
to a given economic climate.
Additionally Prescott and Kydland felt that the policy makers due to their
relationship with government suffered from a credibility issue. The reason
for this dynamic is that the political process is designed to fix problems
and benefit its citizens today. Prescott and Kydland demonstrated this with
a simple yet convincing example. In this example they take an area that
has been shown likely to flood (a flood plain) and the government has
stated that the “socially optimal outcome” is to not have houses be built in
that area and therefore the government states that it will not provide flood
protection (dams, levees, and flood insurance) rational agents will not live
in that area. However, rational agents are forward planning creatures and
know that if they and others build houses in the flood plain the
government which makes decisions based on current situations will then
provide flood protection in the future. While Prescott never uses these
words he is describing a moral hazard.

Kydland, Finn Edward Prescott and Finn Kydland Nobel prize for economics was based
1943 - Present on two papers Prescott and Kydland wrote. In the first paper, written in
1977 “Rules Rather than Discretion: : The inconsistency of optimal
planning” Prescott and Kydland argue that purpose and goals of economic
planning and policy is to trigger a desired response from the economy.
However, Prescott and Kydland realized that these sectors are made up of
individuals, individuals who make assumptions and predictions about the
future. As Prescott and Kydland stated “Even if there is a fixed and agreed
upon social objective function and policy makers know the timing and
magnitude of the effects of their actions… correct evaluation of the end-of-
point position does not result in the social objective being maximized.”
Prescott and Kyland were pointing out that agents in the economy already
factor into their decision making the assumed response by policy makers
to a given economic climate.
Additionally Prescott and Kydland felt that the policy makers due to their
relationship with government suffered from a credibility issue. The reason
for this dynamic is that the political process is designed to fix problems
and benefit its citizens today. Prescott and Kydland demonstrated this with
a simple yet convincing example. In this example they take an area that
has been shown likely to flood (a flood plain) and the government has
stated that the “socially optimal outcome” is to not have houses be built in
that area and therefore the government states that it will not provide flood
protection (dams, levees, and flood insurance) rational agents will not live
in that area. However, rational agents are forward planning creatures and
know that if they and others build houses in the flood plain the
government which makes decisions based on current situations will then
provide flood protection in the future. While Prescott never uses these
words he is describing a moral hazard.
Stiglitz, Joseph Stiglitz's work focuses on income distribution, asset risk management,
1943 - Present corporate governance, and international trade.
Krugman, Paul Krugman is known in academia for his work on international economics
1953 - Present (including trade theory, economic geography, and international finance),
[10][11] liquidity traps, and currency crises. He also writes on topics ranging
from income distribution to international economics. Krugman considers
himself a liberal.
Works

Tableau Economique Quesnay
1759
"The Wealth of Nations" Adam Smith

1776
An Essay on the Principles of Population Thomas Malthus

1798
Theory of Wealth Cournot

1838
Principles - The Principles of Political Economy John Stuart Mill

1848
"The Theory of Political Economy" Jevons' main work

1871
Mathematical Psychics Edgeworth

1881
Principles of Economics Alfred Marshall

1890
On the theory of the budget of the consumer Slutsky

1915
The Treatise on Money Keynes

1930
The General Theory of Employment, Interest and Keynes

Money
1936
Value and Capital Hicks

1939
The Probability Approach in Econometrics Haavelmo

1944

Economics: An Introductionary Analysis Samuelson
1948
Lucas Critique
1976

History of Economics: Ancient Greece Roman Empire

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History of Economics

1000 BC 0 1000 2000 3000

The Marginal Revolution

The Great Depression

New Classical Economists

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von Thünen, Johann Hermann

Cournot, Antoine Augustin

Dupuit, Arsène Jules Étienne

Mill, John Stuart

Gossen, Hermann Heinrich

Edgeworth, Francis Ysidro

von Bawerk-Böhm, Eugen

von Weiser, Freidrich

Keynes, John Maynard

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"The Wealth of Nations"

An Essay on the Principles of Population

Principles - The Principles of Political Economy

"The Theory of Political Economy"

On the theory of the budget of the consumer

The Treatise on Money

The General Theory of Employment, Interest and Money

Value and Capital

The Probability Approach in Econometrics

Economics: An Introductionary Analysis

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Physiocrats Physiocracy is an economic theory developed by the Physiocrats, a group

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As expressed by E. Roy Weintraub, neoclassical economics rests on three

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American Insitutionalist The ‘institutional approach’ to economics goes back to a conference

Institutional economics after 1945

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New classical macroeconomics strives to provide neoclassical

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Two main assumptions deﬁne the New Keynesian approach to

Plato The ideal state.

Aristotle "Politics" and "Nicomachean Ethics"

Petty, William Contributions to classical political economy in methods, concepts and

Quesnay, Francois "Tableau Economique" - circular ﬂow of economy - and founder of

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Bjerkholt Smith Note

Tourgot, Anne Realized decreasing returns in agriculture. Analysis of productive use of

Malthus, Thomas Argued against economist which believed in limitless improvement of

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Wicksell’s third contribution is his celebrated feedback policy rule, under

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Slutsky, Evgeny E. Slutsky was a mathematician, statistician and economist, known in

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Samuelson, Paul Samuelson is considered to be one of the founders of neo-Keynesian

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Arrow, Kenneth In economics, he is considered an important ﬁgure in post-World War II