I am making this thread to ask a few questions I have about Keynesian economics. I am a firm believer in the Austrian school and methodology of Mises and Rothbard. Now, having said this, I am also a college student majoring in economics and as a result almost always have either had a neo-classical or a Keynesian professor. This particular semester I have a Keynesian.
I have never had much problem understanding, as well as refuting, neo-classical economics. But Keynes is sometimes hard to find exactly where to begin, or even what he is trying to say for that matter. But, moving beyond the “general theory”, and more into the neo-Keynesian framework.
First, can someone tell me where is the best way to begin examining the “Keynesian Cross” – Where supposedly we find the equilibrium of planned expenditures and actual expenditures (E=C+I+G; Y=E)?
It seems imperative to combat the Keynesian Cross in order to dispute the government purchases multiplier. Since I believe everyone here is familiar with the multiplier, I won’t explain it.
I have more questions but I want to have this answered first. Thanks to anyone who responds.
JackSkylark: I am making this thread to ask a few questions I have about Keynesian economics. I am a firm believer in the Austrian school and methodology of Mises and Rothbard. Now, having said this, I am also a college student majoring in economics and as a result almost always have either had a neo-classical or a Keynesian professor. This particular semester I have a Keynesian. I have never had much problem understanding, as well as refuting, neo-classical economics. But Keynes is sometimes hard to find exactly where to begin, or even what he is trying to say for that matter. But, moving beyond the “general theory”, and more into the neo-Keynesian framework. First, can someone tell me where is the best way to begin examining the “Keynesian Cross” – Where supposedly we find the equilibrium of planned expenditures and actual expenditures (E=C+I+G; Y=E)? It seems imperative to combat the Keynesian Cross in order to dispute the government purchases multiplier. Since I believe everyone here is familiar with the multiplier, I won’t explain it. I have more questions but I want to have this answered first. Thanks to anyone who responds.
Nah... Maybe we could actually talk about a relevant economist for once... You know... like one that existed within the last half-century?
Well, I am not going to start a "Keysian vs. Truth" discussion. Yet, given the Questions you raised regarding the Keysian Cross look through these Powerpoint presentations.
This is the best "graphical" rebuttal of the validity of the Keysian cross to represent economic events I am aware of.
Have a great time
In the begining there was nothing, and it exploded.
Terry Pratchett (on the big bang theory)
http://www.mises.org/books/failureofneweconomics.pdf
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
I agree, 100%. Take the time to go through the presentations, or to download and listen to Garrison speak (while presenting the presentations) at one of the Mises U. seminars.
Keynesian economics has no consistent (none at all?) Capital theory, without which, macroeconomics is pretty useless, as reams of "aggregate" data are indecipherable.
When I was in grad school for Econ, we had the pleasure of reading W.H. Hutt's The Keynesian Episode. Hutt attackes The General Theory, pretty much page by page and line by line, using much of Keynes' own terminology. As an econ student, I'd recommend it for other econ students, but probably not for anyone else.
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David Z
"The issue is always the same, the government or the market. There is no third solution."
Keynes was a great Economist. He made great contributions to economics for his day and the future. Because of his preference of government intervention, he never saw central banks creating fictitious capital which he called excessive savings. A disequilibrium between investment and savings because of high volatility added to disruptions in the market place. To him, fiscal policy was the answer as he took monetary stability for granted.
I think he would be shock to see our economy having negative savings rate and still investment goes unchecked. I WONDER WHAT HE WOULD SAY ABOUT IT.
Julio: he never saw central banks creating fictitious capital which he called excessive savings.
how did he come to name something that he never anticipated?
I dont think he anticipated anything. He interpreted central banks manipulation and monetary creation as real stuff. He called it excessive savings creating overinvestment and later on cyclical business practices as our economies became more complex. Government was his solution to prevent disequilibrium in the real economy and per se helping to balance investment and savings trough easing the so called excessive savings.
If someone does calculus denying that one and one equals two, we would not consider him a mathematician at all, less even a great mathematician.
In the field of economics that means that I would certainly not call Keynes a great economist. His economy is not wrong because of his preference for government intervention. His economic reasoning and theories are wrong because they are flawed by oversimplification, called aggregation, and do not correlate with the reality of human action and therefor of markets.
Julio:I WONDER WHAT HE WOULD SAY ABOUT IT.
Maybe the same that another world renown expert said yesterday "I might have been wrong at one or another point..." And sure he would embrace the idea of a take-over of the whole economy by the governments. After all, common people are not able to take those actions that would make his theory work at all.
Have a great time ... and a look at the DOW today
Julio:I dont think he anticipated anything. He interpreted central banks manipulation and monetary creation as real stuff. He called it excessive savings creating overinvestment and later on cyclical business practices as our economies became more complex. Government was his solution to prevent disequilibrium in the real economy and per se helping to balance investment and savings trough easing the so called excessive savings.
your english is hard to read but it seems like youve written some nonsense there.
nhaag: If someone does calculus denying that one and one equals two, we would not consider him a mathematician at all, less even a great mathematician. In the field of economics that means that I would certainly not call Keynes a great economist. His economy is not wrong because of his preference for government intervention. His economic reasoning and theories are wrong because they are flawed by oversimplification, called aggregation, and do not correlate with the reality of human action and therefor of markets. Julio:I WONDER WHAT HE WOULD SAY ABOUT IT. Maybe the same that another world renown expert said yesterday "I might have been wrong at one or another point..." And sure he would embrace the idea of a take-over of the whole economy by the governments. After all, common people are not able to take those actions that would make his theory work at all. Have a great time ... and a look at the DOW today
Great observation my friend. I consider him a great economist because of things like inflexibility of prices, multiplier effect, and above all his observation that the flow of money or spending or anything is better to come from the bottom up.
DOW or DOWN????
He's still taught on macroeconomics courses. I learnt all that in my first year (a lot of which I have by now forgotten.) If just for academic reasons, Keynes is still relevant.
-Jon
To darkness I condemn you...
Yes i agree, yet, being relevant and being great in the sense of having contributed to the body of knowledge, seems to be a quite different thing.
Have a great weekend
As I said somewhere up, I have no intention to discuss Keynes.
Only one hint to think about, he might have been right with the multiplier effect if there where no stages of production and all economy was retail.
Cheers
and don't forget humans act :-)
There is no place for english majors here. But coming from a british I will accept your nonsense critic.
nirgrahamUK: Julio:I dont think he anticipated anything. He interpreted central banks manipulation and monetary creation as real stuff. He called it excessive savings creating overinvestment and later on cyclical business practices as our economies became more complex. Government was his solution to prevent disequilibrium in the real economy and per se helping to balance investment and savings trough easing the so called excessive savings. your english is hard to read but it seems like youve written some nonsense there.
Julio:Keynes was a great Economist.
He was a hack.
He did nothing but attempt to create intellectual support for government policies already in existance.
That powerpoint is great, thanks for that. I believe that answers most of my questions on the Keynesian cross.
Also, I am currently reading Hazlitt's "The Failure of the New Economics" - while also going through his "The Critics of Keynesian Economics". I have read Keynes' "General Theory", and can follow Hazlitt's arguments completely. So my main concern is going on to understand the neo-keynesian position and theories (which mostly is trying to make sense out of a lot of equations and derivations).
Does any one know of any resources that directly adress someone like Alvin Hansen or Joan Robinson, or James Tobin (maybe, but he is an easy one)?
Thanks
Julio:I consider him a great economist because of things like inflexibility of prices, multiplier effect, and above all his observation that the flow of money or spending or anything is better to come from the bottom up.
Julio
Keynes is to economics what the inventor of the perpetual motion machine is to science.
The Multiplier Effect claims to get something out of nothing.
Regards
Remnant.
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