Sunday, January 22, 2012

"Keynesian Moment"

“Keynes is back.” It is a familiar cliché, but also an enigma. Enigmatic, first, because Keynes, the most influential economist of the twentieth century, never really left. Like it or not, we live in a macroeconomic world elucidated by Keynes and those who followed in his footsteps. Even Robert Lucas, who won a Nobel Prize for his criticisms of conventional Keynesianism, said in response to the financial crisis: “I guess everyone is a Keynesian in a foxhole.”

But enigmatic also because Keynes himself was never with us. From his vast writings, a few ideas were quickly distilled into analytical tools and policy prescriptions that became known as “Keynesianism.”

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