Saturday, January 23, 2016

Lars P. Syll — On the non-neutrality of money – Keynes v. Krugman

Important Keynes quote.

Krugman posits that the two assumptions that underlie conventional economics are maximization and equilibrium. Long run macro equilibrium (full employment) assumes money neutrality, that is, that money is a veil over barter, hence, money can be ignored as a factor in macroeconomic analysis.

Lars P. Syll’s Blog
On the non-neutrality of money
Lars P. Syll | Professor, Malmo University

1 comment:

NeilW said...

I can't believe this stuff is still listened to. There is no justification for the money neutrality argument. None.

I'm getting the same with 'trade deficits'. Apparently trade deficits are really bad. But nobody can explain to me why a cross-country border trade deficit is so awful, but a intra-country trade deficit isn't. Something that is particularly obvious when they start talking about the Eurozone - not realising that those countries are now states in a union, not countries!

Waving the 'transfers' hands doesn't really cut it in a time when transfers are being slashed to the bone.