# New classical economics

## Movitation

### The Lucas critique

## Microfoundations for the Aggregate Supply curve

### The Lucas islands model

### Adaptive expectations

### Rational expectations

### The Lucas Aggregate Supply (AS) function

### The new classical Phillips curve

## Microfoundations for the Aggregate Demand curve

### Representative agents

#### Income inequality

The use of representative agents means that the model cannot incorporate effects of income inequality.

## Real Business-Cycle (RBC) Dynamic Stochastic General Equilibrium (DGSE) models

### Real Business-Cycle (RBC) Dynamic Stochastic General Equilibrium (DGSE) models

### Estimating RBC DGSE models

### The policy-ineffectiveness proposition

### DGSEs as VARs