Tag Archives: paul krugman

Globalization not as represented by the free traders, who now have egg on their faces and have to eat crow. To boot, trade was supposedly Paul Krugman's specialty, even though he is best known for witing a popular macro textbook. So he was one of "the experts." Will the inapplicability of the ISLM "gadget " be next? So far, Paul Krugman is hanging onto it as it crashes and burns.Lars P. Syll’s BlogPaul Krugman — finally — admits he was wrong!Lars P. Syll | Professor, Malmo University...

I happen to think the minimum wage in the United States should be raised. I'll go along with the consensus of $15 an hour. I also happen to know that, even under ideal conditions, wages and employment cannot be explained by supply and demand. Some economists, who I no (other) reason to disrespect, seem to think my true statement about labor economics can be discredited by attacking my motivations. So they point out how, under (incoherent) neoclassical theory, higher minimum wages can...

Just thought this would be of interest to our readers.  This was aired yesterday, 8/15/19 on: The Take Away, NPR.   (About 12 minutes long.) [embedded content]Click the arrow to hear

In this post, Stephanie Kelton takes on Paul Krugman. She appears to agree with Paul Krugman's assumption that monetary policy that is built on raising interest rates to address inflation is not backwards. Actually, central bank interest rate setting is a form of price setting, the policy rate being a variable that sets the cost of borrowing (price of money). Higher interest rates are also inflationary to the degree that increase the income of holders of securities, as Warren Mosler has...

The New Keynesian monetary mainstream has brought out the big guns. Paul Krugman, Kenneth Rogoff, and Larry Summers have come out to shoot down the rising star known as “MMT,” which stands for Modern Monetary Theory. For a while, it was academically convenient to withhold paying any public attention that could foster competition in the field. Like other non-mainstream ideas in economics, MMT was simply ignored by our star mainstream economists, who are always ready and keen to lend...

The battle of the titans. Or maybe better, David and Goliath. We have to free ourselves from the loanable funds theory — and scholastic gibbering about ZLB — and start using good old Keynesian fiscal policies. Keynes — as did Lerner, Kaldor, Kalecki, and Robinson — showed that it was possible to promote economic growth with an “appropriate size of the budget deficit.” The stimulus a well-functioning fiscal policy aimed at full employment may have on investment and productivity does not...

It is great that Paul Krugman is spending so much time trying to understand MMT, but I don't think he has escaped from his old ideas sufficiently yet to grapple with these new ones.  Professor Krugman assumes an inverse relationship between aggregate demand and interest rates which is stable enough to be useful. In other words, he assumes a reasonably stable and downward sloping IS curve.  No such relationship can be assumed.Fiscal policy is effective because it adds to or subtracts from...

Paul Krugman has a couple of posts criticizing MMT. He tries to be polite, pointing out that at the zero bound their policy recommendations are less bad than those of advocates of austerity. But deep down he must know that this model is sheer madness. Stephanie Kelton responds, and continues the long MMTer tradition of being unable to provide a clear explanation of the ideas.... Bond vigilantes.The Money IllusionMagical Thinking Scott Sumner | Director of the Program on Monetary Policy at...

Now MMT has a bully pulpit, too. The table is still tipped though. But MMT is no longer reduced to rebutting Paul Krugman in his comments section. More progress!Bloomberg OpinionModern Monetary Theory Is Not a Recipe for DoomStephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders

Paul Krugman has piled onto the "MMT explained by non-MMTers" bandwagon, with a critique of Functional Finance. Functional Finance is largely associated with the Old Keynesian Abba Lerner, and is one of the key intellectual roots of Modern Monetary Theory (MMT). In my view, the most interesting part of the article is that it contradicts the commonly made assertion that there is very little new in MMT (which Krugman hints at in the article as well). In presenting his summary of Functional...