"There is an active discourse in the blogosphere that characterizes the debate as a battle between a group of classical fiscal policy deniers and a rearguard group of Keynesian realists who carry the truth of the Master. [..]
I consider myself to be equally entitled to the label ‘Keynesian’ as the leading proponents of fiscal expansion, but I do not share the consensus view of self proclaimed Keynesians that a large fiscal expansion is the solution to our dilemma.The slavish devotion to remedies to the Great Depression that were proposed more than eighty years ago smacks of religion; not science. As Keynes himself said on leaving the Bretton Woods convention in 1946, “I was the only non-Keynesian in the room”."
Roger Farmer, professor of economics at UCLA, on CrookedTimber (*)
I think it is time to really open The Economic Zoo and add the first exotic species: The Homo Keynesianum non-Krugmaniae.
(*) Just in case you are confused: Prof. Fama -> markets are efficient, Prof. Farmer -> markets are inefficient.
2 comments:
Notice that Farmer's suggested policy is that central banks make a ... change in the composition of the balance sheet with the goal of influencing the relative price of assets, with the goal of boosting real aggregate demand.
I wish I could be more certain what that means. My current theory is that it means "promote inflation" thus making goods a better investment than money - if so, very Krugmanian. You have a different interpretation?
Honestly, I have no idea what he means exactly with "qualitative easing".
But it seems to be somewhat similar to 'operation twist': buy risky assets and sell less risky assets.
>> very Krugmanian
I don't think so - he says explicitly that he does not believe in fiscal expansion.
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