Abstract
This paper surveys some of the main developments in macroeconomics since the anti-Keynesian counter-revolution 40 years ago. It covers both mainstream and heterodox economics. Amongst the topics discussed are: New Keynesian economics, Modern Monetary Theory, expansionary fiscal contraction, unconventional monetary policy, the Phillips curve, hysteresis, and heterodox theories of growth and distribution. The conclusion is that Keynesian economics is alive and well, and that there has been a degree of convergence between heterodox and mainstream economics.
Highlights
When Thomas Palley asked me to give this year’s Godley–Tobin Lecture, he suggested that I might present my views about modern developments in macroeconomics
My conclusion is that Keynesian economics has made a comeback in the UK and the USA
This belief is frequently allied with the view that the economy would respond to much lower interest rates if only the lower bound could be breached
Summary
When Thomas Palley asked me to give this year’s Godley–Tobin Lecture, he suggested that I might present my views about modern developments in macroeconomics. I baulked at the idea of covering such a vast field, but I decided it would be an interesting challenge. To the extent that there is one, the underlying theme of my lecture is that, since the initial anti-Keynesian counter-revolution 40 years ago, Keynesian economics has made something of a comeback. It would be an exaggeration to say that ‘we are all Keynesians now’, but surveys indicate that many leading economists in the USA and the UK have Keynesian sympathies (CFM 2014; IGM Forum 2014)
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