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... its trying to do something that can't really be done.

The whole Samuelsonian system of putting a watered down version of mechanical Keynesian economics on a foundation of neoclassical microeconomics ... it doesn't hang together, but it was a convenient political compromise within economic departments at the time. Keynesian economics had too much prestige to ignore, and relying on Samuelsonian rather than General Theory macroeconomics meant that there seemed to be no need to fight with the neoclassicals over micro.

Of course, rebuilding the Keynesian aggregate model on incomplete foundations left it struggling to cope with "stagflation", as inflation in a world with neutral money is a quite different process than inflation in the real world.

I never used the Samuelson text itself, but I've used plenty of textbooks that inherit the Samuelsonian model.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 2nd, 2008 at 12:25:44 PM EST
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