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Kingston Masters Political Economy 04: From IS-LM to Rational Expectations

Summary:
This lecture starts by showing that IS-LM was in fact a Walrasian General Equilibrium model, not a Keynesian model. Neoclassicals like Lucas didn’t know this, but also wanted to construct a macroeconomics that was built directly from microeconomics. The first stage here was Muth’s invention of the concept of “Rational Expectations” in the context of ...

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This lecture starts by showing that IS-LM was in fact a Walrasian General Equilibrium model, not a Keynesian model. Neoclassicals like Lucas didn’t know this, but also wanted to construct a macroeconomics that was built directly from microeconomics. The first stage here was Muth’s invention of the concept of “Rational Expectations” in the context of attacking the Cobweb Model of cycles in a single market.


Steve Keen
Steve Keen (born 28 March 1953) is an Australian-born, British-based economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay.

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