+Handbook. Edited

Introduction 
Our aim in this paper is to introduce the reader to the main episodes that have marked the 
course of macroeconomics. We start by explaining the emergence of modern macroeconomics 
as a new sub-discipline arising in the aftermath of John Maynard Keynes’s General Theory. 
Next, we discuss Keynesian macroeconomics, which had its heyday in the 1950s and 1960s. 
At the end of the 1960s, it came under attack, first from Milton Friedman and later, in a more 
radical way, from Robert Lucas and his associates such as Robert Barro, Thomas Sargent and 
Neil Wallace. These economists, new classical macroeconomists as they were called at the 
time, were able to dethrone Keynesian macroeconomics in a move that had all the trappings 
of a scientific revolution. In turn, Lucas’s work triggered the rise of a series of new Keynesian 
models aimed at rebutting his claim, while adopting his neoclassical language. The next stage 
of the history of macroeconomics occurred when the baton was passed from new classical to 
real-business-cycle (RBC) theorists, in a move initiated by Finn Kydland and Edward 
Prescott. These economists transformed Lucas’s qualitative model into a quantitative research 
programme into which they enrolled a large chunk of the macroeconomic profession. The 
latest stage in the history of macroeconomics is the internal evolution of RBC models towards 
dynamic-stochastic general equilibrium (DSGE) modelling, whereby central elements of 
Keynesian macroeconomics, in particular monopolistic competition and sluggishness, are 
reintroduced into the real business cycle framework.
1
In this entry, we shall only devote a small amount of space to the content of the General 
Theory since this is fully covered in another entry. We will also neglect macroeconomics as it 
existed before Keynes under the name of monetary theory (on this subject, we refer the reader 
to Laidler (1999) or Dimand (2008)). In addition, our study is limited to mainstream 
macroeconomics (for a study of non-mainstream approaches, the reader may consult King 
(2002) or Fine and Milonakis (2008)).