I posted on my “current work” page a new paper with Paul Beaudry and Dana Galizia “Reconciling Hayek’s and Keynes’ views of recessions“. As written in the abstract,
Recessions often happen after periods of rapid accumulation of houses, consumer durables and business capital. This observation has led some economists, most notably Friedrich Hayek, to conclude that recessions mainly reflect periods of needed liquidation resulting from past over-investment. According to the main proponents of this view, government spending should not be used to mitigate such a liquidation process, as doing so would simply result in a needed adjustment being postponed. In contrast, ever since the work of Keynes, many economists have viewed recessions as periods of deficient demand that should be countered by activist fiscal policy. In this paper we reexamine the liquidation perspective of recessions in a setup where prices are flexible but where not all…
View original post 133 more words
Utopia, you are standing in it! 
Recent Comments