On the Future of Keynesian Economics: Struggling to Sustain a Dimming Light. ABSTRACT ... New Keynesians attempt to rescue it from irrelevance with models ...
On the Future of Keynesian Economics: Struggling to Sustain a Dimming Light ABSTRACT Keynesianism continues to lose its dominance in macroeconomics. New Keynesians attempt to rescue it from irrelevance with models recognizing (1) the non-instantaneous adjustment of product prices, (2) imperfect knowledge, and (3) non-clearing labor markets. But these are conditions recognized in classical macroeconomics. The new, post-, and neoclassical Keynesians also seem to be unaware that the five principal pillars upon which Keynes founded his economics, including his conception of saving, the multiplier process, and theory of interest, are badly flawed. Confronting evidence of these flaws will turn the future of Keynesianism into one of a struggle to sustain a dimming light.
