Naked Keynesianism

A short Letter to the Editor, but worth reading. He clearly explains the policy failure since the global crisis and the reasons for the current problems in financial markets in developed and developing countries. He says: The adage that, in the absence of the prospect of growing demand, cheap money amounts to “pushing on a string” has been once again confirmed in advanced economies by the slowest recovery from any modern recession. Instead of funding real investment, monetary expansion has...

So Kevin Drum at Mother Jones discovers the Kaldor-Verdoorn effect, and the fact that growing demand might be the main cause of rising productivity, and idea as old as Adam Smith in his vent for surplus model (chapter 3 of the Wealth of Nations says that the division of labor, that is, productivity, which is the basis for development, is limited by the extent of the market, that is, by demand). I posted extensively on that here (all post by date here), and produced, as far as I know, the...

So Krugman continues to argue that Friedman's calculations are implausible. Well sure. But that's the point to some extent as Galbraith discussed here. The Plan involves huge (read yuge; wink, wink, nudge, nudge) spending, and it should have almost by definition implausible results looking from the perspective of recent history. Imagine the implausible effect that Social Security had on old age poverty. Or the incredible reduction in inequality that the New Deal policies had.If you were in...

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There has been a debate following the NYTimes piece on left of center economists against Bernie Sanders. Doug Henwood replied here and Dean Baker here. Henwood does not discuss the Gerald Friedman paper that led to the whole discussion. Now Jamie Galbraith provided a nice reply to the left of center economists that suggested that Bernie's plans are not realistic. He says: "What the Friedman paper shows, is that under conventional assumptions, the projected impact of Senator Sanders'...

Paul Davidson debates Peter Temin and David Vines in this INET working paper. I had criticized Temin and Vines before here and here. Although in general I agree with Paul, in my view, there is a problem with Keynes’ Bancor Plan kind of solution, that is the one that puts an emphasis on the need for surplus countries to carry the burden of external adjustment. It is really, in the world we live with a hegemonic currency, the role of the issuer of the international reserve currency to carry...

Showing at The Campus Theatre this Saturday, Feb 20th, 4:00pm – THE BIG SHORT – This funny, fact-based film explores the very serious recent collapse of Wall Street and the insiders who saw it coming. Mondragon Bookstore and Susquehanna Valley Progressives are pleased to sponsor this film and a discussion panel of economic and business experts, immediately following the film. Panelists include Dr. Geoffrey Schneider, Professor of Economics, Bucknell University and Dr. Matías Vernengo,...

So a student asked me if the nomination for the Scalia vacancy at the Supreme Court would have any macroeconomic impact. Can't imagine what kind of effect he was thinking about, but there is a relevant question on what are the effects of the inability of the legislative to get things done. The most obvious is the inability to pass a budget that deals with the slow recovery.It used to be the case that both parties had a a very different fiscal agenda, with Democrats being for tax and spend,...

Barking Keynesianism The first post was this day in 2011. The name was based on Fox News criticism of Jamie Galbraith's corruption of youth at the University of Texas, Austin. He was teaching "Naked Keynesianism." And the rest is history.

After my post I got an email and post below by Franklin. Mind you, I still would refer to supermultiplier models as Kaldorian, and the models with autonomous investment as neo-Kaleckian. As Franklin notes Bortis, a Kaldorian and Sraffian, makes the transition to exogenous distribution, even if Kaldor himself didn't. Below the email and the post.Dear Matias:Great Post.Your use of the phrase “no independent investment function” to refer to induced investment models is unfortunately quite...