Since when do Post-Keynesians subscribe to the ISLM model?
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From: Rosser Jr, John Barkley
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED]
Subject: Re: What went right?
Date: Wednesday, March 11, 1998 5:41PM
Doug,
You should have said "take that, Post Keynesians!"
Most garden variety Keynesians who believe in the ISLM
model (supposedly nobody does, but all policymakers and all
macroeconometric forecasting models do) would and did
predict that taxing the rich to reduce the deficit would
lower interest rates and stimulate investment in a
situation with a high budget deficit to begin with, as we
had. The rich have lower mpc's than the poor, so raising
their taxes does not reduce consumer spending as much as
raising taxes on the poor, again, a garden variety
Keynesian viewpoint.
Barkley Rosser (now all the PKs will get on my case)
On Tue, 10 Mar 1998 19:58:35 -0500 Doug Henwood
<[EMAIL PROTECTED]> wrote:
> Michael Perelman wrote:
>
> >I would like to start a dialogue on why the (U.S.) economy has been
> >doing as well as it has over the past few years. We know about the
> >problems, inequities ...., but why has the house of cards stayed up
as
> >long as it has.
>
> Hey, how about this - taxing the rich reduced the budget deficit,
allowing
> interest rates to fall (take that, Keynesians!), but without
compromising
> aggregate demand. The reduction in interest rates explains a lot of
the
> rise in corp profits, which has sustained investment.
>
> I've been away for a few days, so I don't know what anyone else said
yet.
>
> Doug
>
>
>
--
Rosser Jr, John Barkley
[EMAIL PROTECTED]
