The neoclassical synthesis

The neoclassical synthesis is a framework in economics that combines Keynesian ideas about how government can help stabilize the economy during downturns with classical ideas that markets are generally efficient in the long run. It suggests that in the short term, government policies can influence employment and output through fiscal or monetary measures. However, in the long run, markets tend to clear, and the economy favors flexible prices and wages. This integration helps explain how economies can experience short-term fluctuations while remaining efficient over time, guiding economic policies that balance intervention with market forces.