Colander and New Keynesian Economics

[Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>]

FROM:  Paul Davidson
"      Economics Department
"      523 Stokely Management Center     974-4221
Dear Ric: One can define New Keynesian anyway one wants. A rose by any other na
me will smell as sweet and the flower of a ginko  tree by anyother name will st
ill smell awful. So let it be with New Keynesianism -- It has nothing to do wit
h Keynes. It is strictly classical economics (with the same axiomatic base) but
with alternative ad-hoc constrainsts and/or nonlinearities. Classical economist
s always knew that constraints on their system and/or nonlinear demand and supp
ly curves could result in SHORT RUN unemployment. Keynes wanted to demonstrate
that even in the absence of these ad noc constraints and even with simple linea
r curves a monetary economy is not capable of automatically reaching full emplo
yment! Leys keep our eye on the practical political ball and not play academic
intellectual games to show the infinite number of variations of classical econo
mics can provide "Keynesian-type" unemployment. As Roy Rotheim likes to point
out, "keynesian type" unemployment of mainstream economics is not Keynes's unem
ployment! Paul Davidson

Have a good day!