policies advocate deficit spending and expansionary monetary policy.
Krugman is a New Keynesian
, and his essay was intended to show that the Great Recession vindicated standard New Keynesian
Here is the context of that quote: "This slide from Keynesian
theory to particular policies was well illustrated in his seventh edition (1967), when Samuelson cited a statement by Milton Friedman, "We are all Keynesians
controversies since then concern the status of cycles, crises, incomes distribution and incomes policies (pp.
In addition to partial debt relief, sound Keynesian
economics would suggest some increased social spending and public infrastructure projects to create employment.
economics was out neoclassical economics was back in and Milton Friedman was the new guru.
The exploitation of the inflation-unemployment tradeoff soon became the central tenet of Keynesian
Chapters 8 and 9 look at the ways in which various dissenters from the microfoundations dogma--Old Keynesians
, the Austrians, Old Institutionalists--have approached the connection between macroeconomic and microeconomic phenomena.
Later, she taught at Berkeley's Haas School of Business (1980-1994), while publishing articles that never materially questioned Keynesian
dogmas--such as that a free economy is prone to "failures" or "imbalances" (where aggregate demand runs short of aggregate supply); that government spending can add to output; that inflation (a decline in money's purchasing power) results not from excessive money creation but from excessive economic growth; that money-printing can lower unemployment; that savings "leak" from spending flows and cause recessions; and that a central bank should keep interest rates as low as possible in order to provide a profligate, deficit-spending, debt-accumulating government with low-cost funding.
As the world slowly emerges from a recession, contentions over the sources of decline and recovery are reigniting a debate among proponents of three disciplines of economics: neoclassical, Keynesian
, and Marxian.
Perhaps its mains shortcoming is the lack of critical analysis of the Keynesian
active policies of the post--World War II policies.
It seems to describe proponents of the Austrian School of Economics, like Keynesian
is used to describe devotees of John Maynard Keynes.