Saltwater and freshwater economics

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Related fields Econometrics Economic statistics Monetary economics Development economics International economics
Schools Mainstream Keynesian Neo- New Monetarism New classical Real business-cycle theory Stockholm Supply-side New neoclassical synthesis Saltwater and freshwater Heterodox Austrian Chartalism Modern monetary theory Ecological Post-Keynesian Circuitism Disequilibrium Marxian Market monetarism
People François Quesnay Adam Smith Thomas Robert Malthus Karl Marx Léon Walras Knut Wicksell Irving Fisher Wesley Clair Mitchell John Maynard Keynes Alvin Hansen Michał Kalecki Gunnar Myrdal Simon Kuznets Joan Robinson Friedrich Hayek John Hicks Richard Stone Hyman Minsky Milton Friedman Paul Samuelson Lawrence Klein Edmund Phelps Robert Lucas Jr. Edward C. Prescott Peter Diamond William Nordhaus Joseph Stiglitz Thomas J. Sargent Paul Krugman N. Gregory Mankiw
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In economics, the freshwater school (or sometimes sweetwater school) comprises US-based macroeconomists who, in the early 1970s, challenged the prevailing consensus in macroeconomics research. A key element of their approach was the argument that macroeconomics had to be dynamic and based on how individuals and institutions interact in markets and make decisions under uncertainty.^[1]

This new approach was centered in the faculties of the University of Chicago, Carnegie Mellon University, Cornell University, Northwestern University, the University of Minnesota, the University of Wisconsin-Madison and the University of Rochester. They were called the "freshwater school" because Chicago, Pittsburgh, Ithaca, Minneapolis, Madison, Rochester etc. are close to the North American Great Lakes.^[1]

The established methodological approach to macroeconomic research was primarily defended by economists at the universities and other institutions near the east and west coasts of the United States. These included University of California, Berkeley, University of California, Los Angeles, Brown University, Duke University, Harvard University, MIT, University of Pennsylvania, Princeton University, Columbia University, and Yale University. They were therefore often called "saltwater schools".