Keynesian Economics Vindicated: Stagflation Not a Deal Breaker!
The idea that stagflation in the 1970s disproved Keynesian economics is not accurate. Keynesian models could explain stagflation by considering inflation expectations. Keynesian economics improved over time to address stagflation, while new classical economics did not show the same progress. In conclusion, the rejection of Keynesian economics due to stagflation is not justified.