Krugman Debate

2 responses to “Krugman Debate

  1. Bruce,

    I have been meaning to ask you about this post. From the very cursory review of the Austrian school I have learned about via this gentleman’s YouTube videos (an awfully lazy research approach, which I’m embarrassed to admit), it seems to me that this branch of macroeconomics goes against both the Left’s Keynesian approach and the Right’s monetarist policies.

    Is this correct?

    • The Austrian’s tend to discount the importance of lack of demand causing recessions. They share the belief that variation in the stock of money can cause a cycle boom and bust, but by causing resources to poorly allocated, not because demand is reduced. Monetarists think demand is the key and monetary policy drive the business cycle through that. I think it may seem a fine distinction. I don’t really buy into the Austrian school on many points. I think demand does matter. But I’d recommend Bob Murphy’s blog. He gives you things to think about and can be very funny as well.

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