Saturday, April 07, 2007

Old Ideas Ramifying Into Every Corner Of Our Minds

Mark Thoma, Bruce Bartlett, and Paul Krugman, for example, are discussing how "supply-side economics trickled down". The frame of reference, as I understand it, is MIT-style Keynesianism circa 1970, including Solovian growth theory; macroeconomics after Lucas; and policy entrepreneurs in the United States. Real Business Cycle theorists and New Keynesians (that is, "New Pigouvians") are among groups I think of as following macroeconomics after Lucas.

As far as I have seen in the post and comments, Bartlett, Krugman, and Thoma do not acknowledge that their framework seems to be, at least, based on empirically doubtful special case assumptions. At worst, their approach is just incoherent and mistaken. At any rate, supposed empirical results in the literature are a matter of fitting an accounting relationship. Other approaches are possible.

In the early 1960s, Paulo Sylos Labini, an applied Sraffian economist, discussed supply-side economics with others. But that was in another country. As I understand it, Sylos Labini got on well politically with Franco Modigliani, one of the inventors of bastard Keynesianism.