Paul Beaudry, Dana Galizia, 1 June 2014
The views of Hayek and Keynes about the causes and consequences of recessions are often presented as opposing. According to Hayek, recessions are working out excessive investments, whereas Keynes regarded them as demand shortages. This column argues that these perspectives are not mutually exclusive. Recessions may reflect periods of liquidation but this could be associated with inefficient adjustment involving unemployment and precautionary savings. Stimulative policy may be desirable even if it delays the full recovery.
Full Article: Reconciling Hayek’s and Keynes’ views of recessions
Reconciling Hayek’s and Keynes’ views of recessions
Sun, 01 Jun 2014 00:00:00 GMT