Re: "Is Macroeconomics Believable?"

[Chas Anderson <chasna@xxxxxxxxxxx>]

At 02:18 PM 8/22/98 +1000, you wrote:
>At 22:46 20/08/98 -0700, you wrote:
>>
>>
>>In the paradox of thrift, Keynesians confuse saving in the form of money
>>with saving in the form of a new financial asset.
>
>	I don't see how you are making any contact with Keynes argument
>here.  If you use income to purchase a new financial asset, the income
>not spent on acquisition of newly produced goods changes hands, and the
>financial asset changes hands.  Where does the amount of income not spent
>on acquisition of newly produced goods change?

I'm addressing the paradox that is based on a confusion between two
forms of saving, saving in the form of money and saving in the form
of a new interest bearing asset. It's bait and switch. Saving in the form
of money does lead to a withdrawal from the "circular flow" where saving
in the other form does not. You might say the paradox is that there is no
paradox.
>
>>It works in the classroom because students aren't sophisticated enough to
>>know the difference between hoarding and the purchasing of a new financial
>>asset. Remember, all textbooks are built on the two margin principle so
>>students are always given the trade-off between consuming and saving with
>>no discussion of the various forms of saving. Basically, most economic
>>students are so confused by the time they graduate they can hardly make
>>sense out of their degree.
>
>	What relevance does this have for post keynesian economics? What
>is presented as keynesian economics in all mainstream texts bears only
>a passing resemblence to Keynes, Kalecki, etc.  Its closer to Samuelson's
>"keynesian" economics.  You will find many post keynesians agreeing, at
>least privately, with the proposition that you do students a disservice
>by teaching them Samuelsonian macroeconomics.  Any support for this
>type of macroeconomic theory is on the grounds that it is the lesser of
>two evils: students would clearly be misinformed to an even greater extent
>if they are taught one of the neoclassically inspired macroeconomics.
>
I have never seen PKT even referenced in a text.


>>I just finished teaching a graduating class of econ majors with high
>>grade averages who, having studied as a group, turned in finals with
>>particular areas under the IS-LM and AD/AS curves shaded and labeled
>>dead-weight loss. Four years, totally wasted.
>
>	That's what comes from not confronting the difference between
>macroeconomic analysis and microeconomic analysis head on from the
>beginning and sticking to it.  Students think macro is just bigger
>demand and supply curves.
>Bruce McFarling, Newcastle, NSW
>ecbm@xxxxxxxxxxxxxxxxxxx

That's it exactly.  What a major!

Chas
>