Tobin on Macroeconomics: A Review Article

Abstract

James Tobin has been for 4 decades a leading light among first generation of American economists who were trained after publication in 1936 of Keynes's General Theory of Employment, Income, and Money. In his presidential address to American Economic Association, Tobin referred to General Theory as the book that shaped [the] minds [of] economists of my The spirit and development of Tobin's work in many respects exemplify his generation. The present article presents a review and critique of Tobin's contributions to macro and monetary economics. The volume, Essays in Economics: Macroeconomics, henceforth denoted as Essays, collects 24 of Tobin's essays which deal with these subjects and which were originally published between 1941 and 1970. The present review also discusses some of Tobin's subsequent related essays.' Tobin's work on monetary and macroeconomic problems has produced a number of seminal contributions to development of important new frameworks for analysis and to opening of new avenues for fruitful research. Economists have had no problem in appreciating value of these contributions and, in this regard, this review can do no more than underscore Tobin's credits. On negative side, however, are some characteristics of Tobin's approach to macro and monetary questions which seem basically deficient. Because these problems are neither obvious nor perhaps generally appreciated, this review gives somewhat more emphasis to them than would otherwise be warranted. In addition, it