Macroeconomic Theory Quotes

Even if the government spends itself into bankruptcy and the economy still does not recover, Keynesians can always say that it would have worked if only the government had spent more.

I would reject the distinction between a Keynesian moment and a behavioral moment.

My decision to leave applied mathematics for economics was in part tied to the widely-held popular belief in the 1960s that macroeconomics had made fundamental inroads into controlling business cycles and stopping dysfunctional unemployment and inflation.

A free-enterprise economy depends only on markets, and according to the most advanced mathematical macroeconomic theory, markets depend only on moods: specifically, the mood of the men in the pinstripes, also known as the Boys on the Street.

But public works, economic protectionism, cheap money, "deficit-financed government spending," and "the animal spirits of the spendthrift in the service of boosting "consumption demand"... Doesn't Keynesianism simply appeal to the worst in human nature?

The ability to work with systems of general equilibrium is perhaps one of the most important skills of the economist - a skill which he shares with many other scientists, but in which he has perhaps a certain comparative advantage.

Things swept so badly that I had distrust - after 1967, let's say - of American Keynesianism. For better or worse, U.S. Keynesianism was so far ahead of where it started. I am a cafeteria Keynesian.

Economics has paid a terrible price for its dalliances with the Keynesian and neoclassical theories.

In the late 1960s, the New Classical economists saw the same weaknesses in the microfoundations of macroeconomics that have motivated me. They hated its lack of rigor. And they sacked it.

At the time, my personal research objectives were to provide Keynesian economics with more rigorous foundations and to tighten and elaborate the logic of macroeconomic and monetary theory.

Peter Montiel has long set the highest standard for lucid textbooks on the macroeconomics of developing countries. Now in this new edition of his superb classic Macroeconomics in Emerging Markets, he has surpassed even himself. He uniquely fills the gap between rich-country-obsessed macro- and micro-obsessed developing-country analysis. No student of the macroeconomics of development will henceforward be able to do without this book.

The basic idea that if you increase government spending or you cut people's taxes that stimulates the economy and lowers the unemployment rate, is a very widely accepted idea. It's in every economics textbook, that's what we teach our undergraduates, and I certainly try to teach them the truth.

Keynes was scarcely a 'revolutionary' in any real sense. He possessed the tactical wit to dress up ancient statist and inflationist fallacies with modern, pseudoscientific jargon, making them appear to be the latest findings of economic science.

In New Classical theory, periods of declining employment - business cycle downturns - may be caused by an unexpected decline in aggregate demand, which leaves workers mistakenly holding out for nominal wages that exceed the new market-clearing level.

The fallacy of the neoclassicals is their tenet that total employment, though hit by shocks, can be said always to be heading back to some normal level.

The Keynesian belief that 'demand' is always at the root of underemployment and slow growth is a fallacy.

Bernanke has cultivated this idea that he is a brilliant scholar of The Great Depression, but that’s not true at all.

Broadly speaking, Keynesianism means that the government has a specific responsibility for the behavior of the economy, that it doesn't work on its own autonomous course, but the government, when there's a recession, compensates by employment, by expansion of purchasing power, and in boom times corrects by being a restraining force. But it controls the great flow of demand into the economy, what since Keynesian times has been the flow of aggregate demand. That was the basic idea of Keynes so far as one can put it in a couple of sentences.

Two factors explain our success. One, MIT's renaissance after World War II as a federally supported research resource. Two, the mathematical revolution in macro- and micro-economic theory and statistics. This was overdue and inevitable, MIT was the logical place for it to flourish.