Thursday 19 Jul 2018 | 06:33 | SYDNEY
Thursday 19 Jul 2018 | 06:33 | SYDNEY

Reader riposte: The ghost of Keynes


Mark Thirlwell

17 July 2009 14:57

John Hannoush comments on The Economist's critique of the economics discipline (in its latest issue), which Sam linked to this morning:

On the 'failure of economics', I couldn't help noticing the oddity that everyone is now saying that macroeconomic theory has been pretty unhelpful (notably Krugman), while governments everywhere are supposedly relying on one of the great macroeconomic theories, Keynesianism, to justify uber-expenditure and debt.

Actually, I think Krugman, DeLong and co. are being consistent. What they have been saying is that much of modern macro has turned out to be pretty useless when it comes to the specific case of the current crisis. By contrast, much of the recent debate over the efficacy of fiscal policy has basically involved rehashing (or forgetting) old arguments – like the Treasury View – that were conducted back around the time of Keynes' General Theory.