alee228 Posted December 4, 2010 Report Share Posted December 4, 2010 Quote Link to comment Share on other sites More sharing options...
alee228 Posted December 6, 2010 Author Report Share Posted December 6, 2010 Thank you to pparaman for this video. It provides a nice summary of the economics of Keynes and Hayek. Keynes first. Keynesian Economics Nominal wages are downwardly sticky Markets are driven by animal spirits Government spending and lower interest rates can be used to boost output Sometimes monetary policy may fail to stimulate the economy (see liquidity trap) An increase in spending (by increasing investment, consumption, government spending or net exports) will increase aggregate demand by a multiple of the initial increase in spending Quote Link to comment Share on other sites More sharing options...
alee228 Posted December 8, 2010 Author Report Share Posted December 8, 2010 Hayek's Economics Free markets can coordinate prices and the distribution of resources; governments should have a limited role A business cycle boom starts with an expansion of credit and low interest rates which lead to an expansion in the supply of money Easy money leads investors to seek out an ever diminishing number of new investment opportunities; lack of desirable investment opportunities leads to widespread malinvestment Excess money supply leads to inflationary pressure which leads to higher interest rates, and the business cycle turns from boom to bust That's a wrap. Quote Link to comment Share on other sites More sharing options...
alee228 Posted April 29, 2011 Author Report Share Posted April 29, 2011 Round 2. Quote Link to comment Share on other sites More sharing options...
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