Lawrence Klein: Keynesian Economist Who Wanted to Sidestep the Constitution

By Richard M. Ebeling Nobel Prizing-winning Keynesian economist, Lawrence Klein died on October 20, 2013, at the age of 93. A long-time professor of economics at the University of Pennsylvania, he was awarded the Nobel Prize in 1980 for his development of econometric (or statistical) models of the United States “macro” economy for purposes of … Continue reading Lawrence Klein: Keynesian Economist Who Wanted to Sidestep the Constitution

“Modern Market” Monetarism?

by Mario Rizzo Douglas Irwin, a very fine economist at Dartmouth College, has a very puzzling opinion piece in yesterday’s Financial Times. The root of the puzzle is that Irwin seems to accept what I consider the naïve monetarist view, yet calling it by a new name “market monetarism,” that the effectiveness of monetary policy largely … Continue reading “Modern Market” Monetarism?

Uncertainty and the Keynesians

by Chidem Kurdas At the current economic juncture two camps offer diametrically opposed macro policy prescriptions. Economists on the Keynesian side such as Joseph Stiglitz and Paul Krugman advocate further monetary easing by the Federal Reserve and massive new federal deficit spending. The opposing camp includes Austrians and monetarists. Among its distinguished members is Allan Meltzer, who in … Continue reading Uncertainty and the Keynesians

European Austerity in Perspective

by Chidem Kurdas Attempts to rein in government spending necessarily have unpleasant side effects.  Thus the Dutch government collapsed amid budget talks to control the deficit.   And British national output appears to be shrinking. Keynesians and advocates of the Obama administration’s colossal budget see this as vindication for unrestrained government spending. But in fact … Continue reading European Austerity in Perspective

Supply and Demand in Music

by Edward Peter Stringham* Many economists are criticized for being unable to communicate their ideas in am intelligible and non-boring way. How many people, for example, jump to listen about a debate about the Austrian theory of the business cycle? It turns out quite a lot. John Papola and Russ Roberts demonstrated to the world that … Continue reading Supply and Demand in Music

Keynes, the Future and Present Austerity

by Chidem Kurdas In 1930, John Maynard Keynes dashed off an amazing prophecy. Extrapolating from the productivity gains of the past centuries, he came to the bold conclusion that the fundamental economic problem of scarcity would fade away in 100 years or so. Thanks to technological innovation and the accumulation of capital, the ancient condition … Continue reading Keynes, the Future and Present Austerity

“A Divine Miracle”

by Jerry O’Driscoll   In the August 24th Wall Street Journal, Harvard Professor Robert Barro penned a hard-hitting op ed: “Keynesian Economics vs. Regular Economics.” He contrasts the lessons of standard economics with some of the unsubstantiated claims of Keynesian economics. He zeroes in on the idea that transfer payments provide economic stimulus. Transfer payments in … Continue reading “A Divine Miracle”

“Keynesian Death Spiral”

by Jerry O’Driscoll   In Wednesday’s Wall Street Journal, Kevin Hassett explains the economic logic against fiscal stimulus (“Stimulus Optimists vs. Economic Reality”). It’s a superb piece. The more powerful one believes fiscal stimulus to be, the more adept the Keynesian policymaker must be. If the stimulus has powerful positive effects when added, it will have … Continue reading “Keynesian Death Spiral”

George Soros, F.A. Hayek, and The Constitution of Liberty

by Mario Rizzo I think George Soros is a good man. To me he seems like a person who wants to make the world a better place. He, like Keynes, is against comprehensive economic planning (ambiguities about “planning” noted) but thinks that financial markets are inherently unstable and thus must be regulated by a nimble … Continue reading George Soros, F.A. Hayek, and The Constitution of Liberty

Hayek and Keynes Debating in Wonderland

by Thomas McQuade Here’s what Alice might have recited to the Caterpillar, had Charles Dodgson been a 20th century economist of sorts: You are old, Maynard Keynes, and your theory’s askew, It’s easy for one to see through it – Yet everyone thinks that you’ve said something new. Just how did you manage to do … Continue reading Hayek and Keynes Debating in Wonderland

Brad DeLong Should Read More

by Mario Rizzo   In March of this year Brad DeLong wrote a post called “More from the History of Economic Thought: John Stuart Mill Contra Say's Law, 1844”   It contained a long quotation from John Stuart Mill from his essay “Of the Influence of Consumption on Production,” in Some Unsettled Questions of Political Economy (1844, … Continue reading Brad DeLong Should Read More

The Second Austrian Moment

by Mario Rizzo   This is an important time for Austrians. During the Great Depression and for many years thereafter, J.M. Keynes and his followers dominated macroeconomic theory (some say they created it) as well as the conventional wisdom about the historical lessons of the Depression and the New Deal.   We are now witnessing many important … Continue reading The Second Austrian Moment

Keynes on Confidence

by Jerry O’Driscoll   Amity Shlaes has written an enlightening op ed on “FDR, Obama and ‘Confidence’” in today’s Wall Street Journal. She details how FDR destroyed investor confidence in the 1930s by his incessant attacks on business and businessmen, and by his policy inconsistency. Treasury Secretary Morgenthau at first served as FDRs “yes” man and … Continue reading Keynes on Confidence

Still Hearing Defunct Economists in the Air: Krugman’s Misplaced Attack on Hayek

by Richard Ebeling*  On July 9th, Nobel economist and New York Times columnist, Paul Krugman, gave his read on the recently unearthed letters between J. M. Keynes and F. A. Hayek in the London Times in October 1932, which have been posted and discussed on ThinkMarkets. (and in the Wall Street Journal). Krugman insists that Hayek … Continue reading Still Hearing Defunct Economists in the Air: Krugman’s Misplaced Attack on Hayek

F.A. Hayek and Tyler Cowen

Do we have more evidence of the continuing great debate between Hayek and Keynes? In the now "famous" 1932 letter to The Times of London signed by F.A. Hayek, Lionel Robbins, T. E. Gregory and Arnold Plant, we read:  The signatories of the letter referred to [by Keynes, Pigou et al.], however, appear to deprecate … Continue reading F.A. Hayek and Tyler Cowen

Hayek versus Keynes in the Wall Street Journal

by Mario Rizzo The discussion of the Hayek-Keynes letters of 1932 in The Times of London continues in 2010 in the Wall Street Journal in today's issue. The opinion piece is by Jerry O'Driscoll, a frequent blogger at ThinkMarkets. My previous TM discussion is here. Update: For the ungated version of the WSJ article, place the … Continue reading Hayek versus Keynes in the Wall Street Journal

Keynes versus Hayek: Past is Prologue

KEYNES HAYEK 1932 Cambridge vs.LSE by Mario Rizzo   My friend economist Richard Ebeling has discovered two extremely important letters. (Click the link above.) In 1932 before John Maynard Keynes’s General Theory was written, these letters appeared in The Times of London regarding the appropriate economic policies for Britain to follow during the slump.   There are … Continue reading Keynes versus Hayek: Past is Prologue

“In the Long Run We Are All Dead” What Does It Mean?

by Mario Rizzo  Paul Krugman continues to invoke Keynes’s famous statement. I wish Krugman and others would give some serious thought about what it is supposed to mean and the errors it involves.    In the first place, Keynes was complaining about the “classical” economics, that is, the ideas of the economists before him who believed that … Continue reading “In the Long Run We Are All Dead” What Does It Mean?

The Fed’s Coming Indiscretion?

by Mario Rizzo   There seems to be broad agreement among economists that the current recovery from the recession will be characterized by a slowly falling unemployment rate. This makes a good deal of sense since the problem that created the recession was a misdirection of resources into a number of sectors including housing construction and … Continue reading The Fed’s Coming Indiscretion?

Keynes on the Bismuth — Castor Oil Cycle

by Jerry O'Driscoll     J. M. Keynes was well-aware of the problems of conducting counter-cyclical policy to stabilize employment.   The problem is when to add stimulus, when to withdraw it, and not to overdo it.    In Keynes' Treatise on Money (1930), Keynes analogizes it to a family taking care of a sick child with doses of … Continue reading Keynes on the Bismuth — Castor Oil Cycle

Pigou is the new Keynes

by Sandy Ikeda A full-page article in today's Wall Street Jounal begins: At the Heavenly Models home for deceased economists, an award is being presented to the resident whose work best explains financial crises, global warming, and other pressing issues of today. The winner, according to author John Cassidy, is A.C. Pigou, the new flavor … Continue reading Pigou is the new Keynes

The New Interventionist Economics

by Roger Koppl Two recent posts on this blog (here and here) raise the issue of animal spirits and where macro is headed.  I’ve recently completed a draft manuscript saying we are headed for “BRACE” economics.  I say the “New Interventionist Economics” will be characterized by five features: Bubbles Radical Uncertainty Animal Spirits Complexity Dynamics … Continue reading The New Interventionist Economics

Animal Spirits

by Jerry O’Driscoll In a previous post, Mario Rizzo reminds us that Keynes was concerned with the volatility of investment.  Keynes was not alone.  By the dawn of the 20th century, virtually every significant business cycle theorist viewed the volatility of investment as the central theoretical problem. In the General Theory, Keynes (p. 149) posed … Continue reading Animal Spirits

Economics To End Economics

by Mario Rizzo   I used to think that Ludwig von Mises was exaggerating quite a bit when he suggested that Keynes was not really an economist. One way he did this was to associate Keynes with infamous monetary cranks like Silvio Gesell. The following quotation will give you a flavor of Mises’s opinion:   “John Maynard … Continue reading Economics To End Economics