Difference between revisions of "Talk:Keynesian economics"
Latest revision as of 08:45, 31 May 2013
I am no economist, but my undergraduate classes in it lead me to believe that it was *not* Keynes that asserted that unemployment and inflation were "opposites", The relationship between them was first discovered by an economist named Phillips (hence it was called the "Phillips Curve") in the 1950s, after Keynes' death, though based on Keynes' model of the economy. Milton Friedman then (correctly, as I understand it) theorized that the real relationship between the two was that set forth in the "expectations augmented" Phillips Curve. That refinement is not at odds with Keynesianism, and is generally accepted by Keynesians.
That said, I'm no expert so hesitate to change the article to delete the reference, without at least giving someone the chance to put me in my place. Besides, my undergraduate classed were Keynes-heavy and therefore possibly biased. Jesus Saves 19:40, 12 March 2010 (EST)
- From what I understand, the Phillips Curve was originally derived from observation, plotting unemployment rates versus inflation. I believe that monetarists and the Federal Reserve use this relationship more than Keynesians and were the first to explain the relationship. The idea is that increased money supply will encourage lending by creditors, depress interest rates and increase employment because borrowing is so cheap. The increase in the money supply and increased velocity causes inflation to rise at the same time. Unemployment rises in recessions because credit is tight and interest rates rise because firms are less willing to lend in periods of economic uncertainty. Correspondingly with rising interest rates, inflation is low. I believe this clause should be deleted too and I will probably make some edits in the next few days unless there are any who really like this page as is. —The preceding unsigned comment was added by Churchofthetrail (talk)
- Should read, "firms are less willing to borrow" in times of uncertainty. Joseph Schumpeter clears up this mess: rising interest rates reflect a demand for more workers and more empolyment. Low interest rates mean nothing is worth investing in, i.e., "The vanishing of investment opportunity." "investment", in this sense, means hiring or employing people, not the Marxist rhetoric we've come accustomed to associated with rich people & greed. Rob Smith 23:54, 14 June 2011 (EDT)