I believe neo keys don’t believe consumers have rational expectations while new keys do believe they do.
To maintain hegemony, of course. Power is static. They’re capturing too much of it.
How does this justify a 61% gap between them though?
Several of the questions are based on actions that you would take from an economic standpoint, if you believe that consumers are not always rational then you will take a significant amount of different actions then if you did believe they were rational. For example let’s say a market shock happens , if you are a neo key you would think it necessary to calm everyone down via some form of market intervention , but if you are a new key like me you wouldn’t do that because you think that consumers wouldn’t need to be reassured on an individual market shock, as they simply just wait until it’s stable again etc. There are folks on here who are much more knowledgable then me on this, but none seem to be active as of late
lel fk off you neo-mercantilist
It’s probably because I included some of my normative and polsci views in with this rather than going for straight-edge, academic econ views.
>Where I was like 2 years ago
Keynesianism says that if the government spends money, the people get the money, and they spend it. This then gives other people money, and they spend it.
When Friedman and others came along and said that monetary policy plays and important part too, and his theory of permanent income (a person doesn’t consume based on how much they currently have, they’ll consumes based on what they have in the future, so Keynesian stimulus is largely pointless) was widely accepted, New Keynesianism was born.
These were Keynesians, who took the permanent income theory and put it at the heart of their model (old Keynesians fought hard against the theory). They believe that people will look at today and tomorrow, and spend based on interest rates.
In their models, government spending raises inflation and (missing out a lot of theory) thus, interest rates fall. Because saving is no longer a good idea (shit interest), people spend instead.
And that’s the main difference really.
Please read above for context
Some Keynesians in the early 20th century synthesised old Keynesianism with neoclassical theory, and their work became know as neo-classical synthesis. It was largely Keynesian in macroeconomics (the whole economy) and neoclassical in microeconomics (individual behaviour within the economy).
In a very very crude explanation, they simply put supply and demand into Keynesian economics. This was the main school of economic thought post WWII up until the beginning of the 80s really. And it’s the precursor to mainstream economics today.
The difference between the two is, as @Nationalist_Libertarian said, that new-Keynesians place far more emphasis on rational expectations than neo-Keynesians. New-Keynesians also use DGSE modelling (don’t worry about what it is (unless you want to) but if it helps, the ECB use DGSE modelling to analysis the Eurozone economy) while neo-Keynesians don’t.
Other than that, they’re very similar schools. Both to the ‘right’ of Keynesianism though, to help you visualise it.
Can you recommend any literature on the Austrian or Chicago schools btw?
common sense man
Well fuck me for trying to read more
If you’re curious about Chicago School then you have read Milton Friedman.
Freedom to choose by Milton Friedman is a good overview and personal statement on his economic thought. He was one of the most prominent Chicago school economists.
Literature on Austrian or communist schools of thought can be found in your local recycling bin.
Unfortunately their library prices rise as supply decreases due to all the throwing away.
A word of caution about the Austrian school, anything after the mid-20th century is rejected by most people (myself included), but their first wave stuff is largely incorporated into today’s mainstream economics.
Principles of Economics by Carl Menger is the founding text of the school, so probably a good start.
The Road to Serfdom by Friedrich Hayek is also good, and it’s not really hard Austrian theory, much like how a lot of Friedman’s stuff isn’t hard Monetarist theory. It’s more about how Capitalism will save the world. But Hayek was in the Austrian school, and it’s a very influential book (Reagan and Thatcher loved it).
In Theory of Social Economy, Friedrich von Wieser gives his theory on opportunity cost (relationship between scarcity and choice) and is key to mainstream economics.
Within Capital and Interest, Eugen Bohm von Bawerk theorises on time preference (value of goods in the present or future) which, like opportunity cost, has been absorbed by mainstream economics. Bawerk’s criticisms of Marx are also well regarded by the mainstream too.
When you have finished reading the fist wave stuff and decide to wonder into Austrian fantasy land, Economics in One Lesson by Henry Hazlitt and Man, Economy and State by Murray Rothbard are probably a good read.
I imagine fairly obviously, anything by Friedman is good.
I’d recommend A Monetary History of the United States by Friedman and Anna Schwartz, as not only is it uber interesting, it’s also very influential, especially among central bankers.
Chicagonomics: The Evolution of Chicago Free Market Economics by Alan Ebstein is new so I doubt you’ll be able to read it for free, but even the New York Times says it’s an important book to read.
“Monetary Dynamics of Hyperinflation” in Studies in the Quantity Theory of Money (edited by Friedman) by Phillip Cagan is pretty economic theory heavy, but an important addition to economics, let along to Monetarism (I think by Chicago School, the quiz means monetarism, as it’s just a neoclassical school otherwise).
“recovered capitalist” shares the same economic school as a right libertarian, although to be fair most right libertarians are Austrians,
I don’t really prescribe to any economic school. I just figured what would make the most sense to do right now. My positions are highly affected by the time in which I hold them.
If you dont mind me asking too much, are you a lad or a lass (no irish don’t usually use lass but I sometimes like it)