Re: Uncle Miltie, he dead
On Nov 18, 2006, at 3:31 PM, tfast wrote:
Here is Delong Defence,
But even as Monetarism subspecies four was failing its empirical
test, large elements of Monetarism subspecies three-Classic Monetarism-were
achieving their intellectual hegemony. For under normal circumstances
monetary policy is a more potent and useful tool for stabilization than it fiscal
policy. The frictions that give slope to the expectational aggregate supply
curve are key causes of business cycle fluctuations. The natural rate
hypothesis has strong empirical support, and does mean that fluctuations are best analyzed as being about trend rather than being beneath potential.
It is better to analyze macroeconomic policy by considering the long-run implications of rules. And any sound view of stabilization policy must recognize how limited are its possibilities for success.These insights survive, albeit under a different name than
“Monetarism.” Perhaps the extent to which they are simply part of the air that
modern macroeconomists today believe is a good index of their intellectual hegemony.
What the fuck does all this amount to? A skepticism about fine-
tuning? An appreciation of the limits to fiscal stimulus? For this we
needed Milton Friedman?
Doug