Re: Re: Brad DeLong's column

[Brad De Long <delong@xxxxxxxxxxxxxxxxx>]

> Both of the quotes-- deficits crowd out private investment and deficits
> cause high interest rates (more specifically there that lowering deficits
> cause lower interest rates) are pure Summers, but you are right that
> "pre-Keynesian" is the correct general label.

Nah. In the context of the 1980s and 1990s, the Federal Reserve has
its target for real GDP and unemployment that it will try to hit--so
a bigger deficit means higher interest rates. It's not the
pre-Keynesian childish babbling of a Say, but a certain (I think
correct) view of how the Federal Reserve behaves...


Brad DeLong
--

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"Now 'in the long run' this [way of summarizing the quantity theory
of money] is probably true.... But this long run is a misleading
guide to current affairs. **In the long run** we are all dead.
Economists set themselves too easy, too useless a task if in
tempestuous seasons they can only tell us that when the storm is long
past the ocean is flat again."

--J.M. Keynes
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
J. Bradford De Long; Professor of Economics, U.C. Berkeley;
Co-Editor, Journal of Economic Perspectives.
Dept. of Economics, U.C. Berkeley, #3880
Berkeley, CA 94720-3880
(510) 643-4027; (925) 283-2709 phones
(510) 642-6615; (925) 283-3897 faxes
http://econ161.berkeley.edu/
<delong@xxxxxxxxxxxxxxxxx>