Re: Fw: Obituary: Franco Modigliani

[Bill Mitchell <ecwfm@xxxxxxxxxxxxxxxxxxxxxxx>]

Dear Gunnar

> Re. the
> following:
>  
> "Unemployment is primarily due
> to lack of aggregate demand. This is mainly the outcome of erroneous
> macroeconomic policies? [the decisions of Central Banks] ? inspired by an
> obsessive fear of inflation, ? 
> coupled with a benign neglect for unemployment ? have resulted in
> systematically over tight monetary 
> policy decisions, apparently based on an objectionable use of the
> so-called NAIRU approach. The contractive 
> effects of these policies have been reinforced by common, very tight
> fiscal policies (emphasis in original)"
> Comment:
>  
> In this day and age, the proposition that
> "unemployment is primarily due to lack of aggregate demand"
> strikes me as Modigliani's reaffirmation of his Keynesian Faith rather
> than a statement of an analytical conclusion arrived at after review and
> weighing of all the evidence.

If you have a look at his paper you will see in fact that he does provide
extensive empirical analysis. This of-course
doesn't contradict your point.

best wishes
bill

------

William F. Mitchell

Professor of Economics

Director, Centre of Full Employment and Equity

University of Newcastle

New South Wales, Australia

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