John Cochrane and Robert Lucas going off again. Government spending "crowds out" private spending. Bill Vickrey points out the mistake.Lars P. Syll’s Blog
Chicago economics is a dangerous pseudo-scientific zombie ideology that ultimately relies on the poor having to pay for the mistakes of the rich. Trying to explain business cycles in terms of rational expectations has failed blatantly. Maybe it would be asking to much of freshwater economists like Lucas and Cochrane to concede that, but it’s still a fact that ought to be embarrassing. My rational expectation is that 30 years from now, no one will know who Robert Lucas or John Cochrane was. John Maynard Keynes, on the other hand, will still be known as one of the masters of economics.
The tiny little problem with Chicago economics
Lars P. Syll | Professor, Malmo University