Thomas Hintermaier

Absolutely @dandolfa ! "In this summary we shall assume that the money-wage and other factor costs are constant per unit of labour employed. But this simplification, WITH WHICH WE SHALL DISPENSE LATER, is introduced solely to facilitate the exposition. (Keynes, General Theory 1936, p. 27). my emphasis" (Quoted in rogerfarmer.com/s/The-import…) @FanTastischenDa @JesusFerna7026

Sure 1. Confidence crashes and animal spirits static1.squarespace.com/stat… 2. Old Keynesian Economics static1.squarespace.com/stat… 3. Aggregate Demand and Supply static1.squarespace.com/stat… 4. Animal Spirits, Financial Crises and Persistent Unemployment static1.squarespace.com/stat… 5. The Evolution of Endogenous Business Cycles static1.squarespace.com/stat… 6. the Role of Financial Policy static1.squarespace.com/stat… There are more but that’s a start

Thank you Jon @JonSteinsson for this detailed response. We agree about all three of your statements although they are not all of the same ontological category. Point 1 comes closest to a theoretical component of a research program. Points 2 and 3 are falsifiable statements but they do not have much bite as experiments to tell apart one research program from another. Consider Point 2. This can be made precise. For example, we know that the Fed Funds Rate Granger causes GDP. Since the Fed Funds Rate is unquestionably an instrument of monetary policy: this statement is a way to operationalize point number 2. I understand what you mean by point 3 and I believe there is a way to make the statement precise but that would require us to agree on how to identify a demand shock and how to define ‘accommodate’. But that should not be difficult and I agree about what I think we would find. Point 1 is harder to verify since a person wedded to the market clearing assumption might assert that there are assumptions one might make about labor supply and demand elasticities that enable the market clearing approach to explain these data. To some economists, the first welfare theorem is a tautology. I’m not sure if Ed Prescott ever made this argument, but if not, he came close. To the extent we disagree, I suspect those disagreements could be resolved by discussion. I place much more weight on beliefs as a driver of markets and whereas you are content with two steady states — I think that there is an open set of equilibria selected by beliefs. My view is much closer to the Cambridge England position of the 1960s as opposed to the Cambridge Massachusetts position. The Cambridge Mass position eventually evolved into what we call New Keynesianism. Joan Robinson had a better name. She called it bastard Keynesianism. The early presentation of Keynesian economics in the form of the IS/LM model claimed that high unemployment could exist as a steady state equilibrium if demand was low. Patinkin combined general equilibrium theory and monetary theory and he showed, through the wealth effect, that this argument could not be sustained. Patinkin’s argument led to Samuelson’s ‘neoclassical synthesis’ which added the Phillips curve to link the disequilibrium short-run with the steady-state long run. The consensus model that evolved was embraced by Cambridge Mass Keynesians and Chicago monetarists alike and, when institutionalized by Mankiw’s textbook: it became gospel truth. I believe that Samuelson made a big mistake when he introduced the neoclassical synthesis and that there is a much better way of unifying money and value theory. That is the view I have been promoting in my books and papers for the last couple of decades. But the further we move from the point when Cambridge Mass and Cambridge England diverged, the harder it is to find an audience that has been schooled in the earlier debate. I am a big fan of your body of work and I appreciate your openness to alternative approaches. It demonstrates that, like Mervyn King, you are not a New Keynesian.