Saturday, November 20, 2010

Glad That's Settled

For the last couple of years, David Brooks and Paul Krugman, whose columns appear on the New York Times op-ed page, have been conducting a gentlemanly duke-out about the federal government's role in stimulating the economy. Luckily, a blogger at the "Economist" has finally straightened it all out:
The trouble with the "liberal technicians", as I see it, is that they are caught in something of a no-man's-land between "old-fashioned hydraulic Keynesianism" and updated, "behavioural" neo-Keynesianism. The microfoundations of old-school hydraulic Keynesianism are no more plausible than those of the Lucas-Sargent-Prescott "fresh-water" rational expectations school, and hydraulic Keynesian models are less well empirically validated.

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