Edmund Phelps on Keynesian macroeconomic policy
25 Feb 2015 2 Comments
in budget deficits, business cycles, economic growth, F.A. Hayek, fiscal policy, global financial crisis (GFC), great recession, macroeconomics, monetary economics Tags: Austrian real business cycle theory, Edmund Phelps, FA Hayek, Keynes in macroeconomic policy
Uncertainty bedevils the best system | Edmund Phelps
02 Feb 2015 Leave a comment
in applied price theory, economic history, entrepreneurship, macroeconomics Tags: Edmund Phelps
HT: http://blogs.ft.com/capitalismblog/2009/04/15/uncertainty-bedevils-the-best-system/#axzz3EezojKXs
The Golden Rule, John Rawls and just saving for the future generations
22 Jan 2015 Leave a comment
in economic growth, macroeconomics Tags: Edmund Phelps, Golden rule of savings, intergenerational equity, John Rawls, just savings
Why is the Left so keen to tax the rich of today, which reduces investment, but through this concerns about sustainable development, not tax the rich of the next generation by leaving them a smaller capital stock?
Rawls proposes a principle of just savings. Rawls suggests that each generation puts itself in the place of the next, and asks what it could reasonably expect to receive.
Currently living people have a justice-based reason to save for future people only if such saving is necessary for allowing future people to reach the sufficientarian threshold as specified. This is known as the accumulation stage.
Once just institutions are securely established — this is known as the steady-state stage — justice does not require people to save for future people. Rawls also holds that, in that second stage, people ought to leave their descendants at least the equivalent of what they received from the previous generation.
Edmund Phelps developed a Golden Rule in the 1960s that suggests that it is possible to save and invest too much. Phelps also generated the result that the savings rate can be too high:
The basic significance of the golden rule is as a warning against national policies of over-saving or counterproductive austerity.
Policy bubble alert: R&D is an investment and like all investments, it must be cost justified
07 Nov 2014 Leave a comment
Utopia, you are standing in it! 
Recent Comments