Thomas Palley on flim-flamming “New Keynesianism”

2 May, 2014 at 10:50 | Posted in Economics | Comments Off on Thomas Palley on flim-flamming “New Keynesianism”

flimflam-2Yesterday Paul Krugman wrote a reply to Thomas Palley’s postings (Part 1 and Part 2) on the flimflam of mainstream economics.

According to Krugman, Palley is “so sure that mainstream Keynesians have unlearned all the important lessons that he hasn’t bothered to read what we actually write.”

As I wrote yesterday, I think Krugman’s answer to the critique put forward by  Thomas Palley, Jamie Galbraith and yours truly, not only trivializes what the Cambridge controversy was all about, but also obviously wants to rewrite the history of economics — and getting it all wrong!

Here’s Palley’s response:

Dear Paul,

I enjoy what you write and have great admiration for your work, but this piece is unfair.

(1) Here is an article of mine on what you term the paradox of flexibility, published in 2008 and extending James Tobin’s seminal paper on “Keynesian Models of Recession and Depression”.

“Keynesian Models of Deflation and Depression Revisited,” Journal of Economic Behavior and Organization, 68 (October 2008), 167 – 77.

(2) I do not think I am misportraying you. Your own macroeconomic framework seems unconvincing to me as a description of a capitalist economy, being Keynesian at the zero lower bound and classical the rest of the time. I think of Keynesianism as being a macroeconomic theory that applies at all times. But these are issues that require more space for discussion.




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