---
title: "History of economic thought"
chunk: 18/18
source: "https://en.wikipedia.org/wiki/History_of_economic_thought"
category: "reference"
tags: "science, encyclopedia"
date_saved: "2026-05-05T03:59:30.681827+00:00"
instance: "kb-cron"
---

In 1962–1963 Scottish economist Marcus Fleming (1911–1976) and Canadian economist Robert Mundell (1932–) published the Mundell–Fleming Model of the Economy, an extension of the IS–LM Model to an open economy, proposing the Impossible Trinity of fixed exchange rate, free capital movement, and an independent monetary policy, only two of which can be maintained simultaneously. Mundell received the 1999 Nobel Economics Prize.

=== Market for corporate control ===
In 1965 American economist Henry G. Manne (1928–2015) published Mergers and the Market for Corporate Control in Journal of Political Economy, which claims that changes in the price of a share of stock in the stock market will occur more rapidly when insider trading is prohibited than when it is permitted, founding the theory of market for corporate control.

=== Information economics ===

In 1970 George Akerlof (1940–) published the paper The Market for Lemons, founding the theory of Information Economics, receiving the 2001 Nobel Economics Prize.
Joseph E. Stiglitz (1943–) also received the Nobel Economics Prize in 2001 for his work in Information Economics.  He has served as chairman of President Clinton's Council of Economic Advisers, and as chief economist for the World Bank. Stiglitz has taught at many universities, including Columbia, Stanford, Oxford, Manchester, Yale, and MIT.  In recent years he has become an outspoken critic of global economic institutions. In Making Globalization Work (2007) he offers an account of his perspectives on issues of international economics:

"The fundamental problem with the neoclassical model and the corresponding model under market socialism is that they fail to take into account a variety of problems that arise from the absence of perfect information and the costs of acquiring information, as well as the absence or imperfections in certain key risk and capital markets. The absence or imperfection can, in turn, to a large extent be explained by problems of information."
Stiglitz talks about his book Making Globalization Work here.

=== Market design theory ===

In 1973 Russian-American mathematician-economist Leonid Hurwicz (1917–2008) founded Market (Mechanism) Design Theory, a.k.a. Reverse Game Theory, which allows people to distinguish situations in which markets work well from those in which they do not, aiding the identification of efficient trading mechanisms, regulation schemes, and voting procedures; he developed the theory with Eric Maskin (1950–) and Roger Myerson (1951–), sharing the 2007 Nobel Economics Prize with them.

=== The Laffer curve and Reaganomics ===

In 1974 American economist Arthur Laffer formulated the Laffer curve, which postulates that no tax revenue will be raised at the extreme tax rates of 0% and 100%, and that there must be at least one rate where tax revenue would be a non-zero maximum.  This concept was adopted by U.S. President Ronald Reagan in the early 1980s, becoming the cornerstone of Reaganomics, which was co-founded by American economist Paul Craig Roberts.

=== Market regulation ===
In 1986, French economist Jean Tirole (1953–) published "Dynamic Models of Oligopoly", followed by "The Theory of Industrial Organization" (1988), launching his quest to understand market power and regulation, resulting in the 2014 Nobel Economics Prize.

== 21st century ==

The 2008 financial crisis led to the Great Recession. This prompted some macroeconomists and Financial Economists to question the current orthodoxy.
One response was the Keynesian resurgence. This emerged as a consensus among some policy makers and economists for Keynesian solutions. Figures in this school included Dominique Strauss-Kahn, Olivier Blanchard, Gordon Brown, Paul Krugman, and Martin Wolf.
Austerity was another response, the policy of reducing government budget deficits. Austerity policies may include spending cuts, tax increases, or a mixture of both. Two influential academic papers support this position. The first was Large Changes in Fiscal Policy: Taxes Versus Spending, published in October 2009 by Alberto Alesina and Silvia Ardagna.  It asserted that fiscal austerity measures did not hurt economies, and actually helped their recovery. The second Growth in a Time of Debt, published in 2010 by Carmen Reinhart and Kenneth Rogoff. It analyzed public debt and GDP growth among 20 advanced economies and claimed that high debt countries grew at −0.1% since WWII. In April 2013 the IMF and the Roosevelt Institute exposed basic calculation flaws in the Reinhart-Rogoff paper, claiming that when the flaws were corrected, the growth of the "high debt" countries was +2.2%, much higher than the original paper predicted. Following this, on 6 June 2013, Paul Krugman published How the Case for Austerity Has Crumbled in The New York Review of Books, arguing that the case for austerity was fundamentally flawed, and calling for an end to austerity measures.

== See also ==

== References ==

=== Primary sources ===

=== Secondary sources ===

== External links ==

The History of Economic Thought. By Gonçalo L. Fonseca.
Archive for the History of Economic Thought
"Family tree" of economics poster from the 16th century on.
Pioneers of the social sciences London School of Economics and Political Science Archived 26 July 2016 at the Wayback Machine