This chapter examines the rise of New classical Economics (NcE) following the Great Stagflation. The perceived failure of Keynesian policies to manage simultaneous inflation and unemployment created an opening for monetarism (led by Friedman) and subsequently the more radical NcE counter-revolution led by Lucas. NcE shifted methodologic foundations, grounding macroeconomics in stochastic general equilibrium theory (Arrow-Debreu model) and introducing the Rational Expectations Hypothesis. This ‘equilibrium method’ assumes that agents possess full relevant information (excluding stochastic factors) and make optimal choices so that the economy is always in equilibrium. Observed fluctuations are seen as optimal responses to exogenous shocks, not market failures. Consequently, NcE denied the possibility of involuntary unemployment and the efficacy of counter-cyclical policies. Early NcE models focused on unanticipated monetary shocks (Lucas’s monetary business cycle). Later, real business cycle theory (Kydland and Prescott) shifted to real shocks, employing ‘calibration’ rather than traditional econometrics for empirical validation. New Keynesian economics (NKE) emerged, accepting the NcE methodology but introducing specific market imperfections (such as sticky prices/wages, efficiency wages, menu costs) to explain temporary deviations from equilibrium and justify policy interventions. This led to a ‘New Consensus’ synthesizing elements of NcE and NKE that dominated until the 2007–2009 financial crisis.