On Nov 18, 2006, at 3:31 PM, tfast wrote:
> Here is Delong Defence,
>
>
> But even as Monetarism subspecies four was failing its empirical
> test, large
> elements of Monetarism subspecies three-Classic Monetarism-were
> achieving
> their intellectual hegemony. For under normal circumstances
> monetary policy
> is a more potent and useful tool for stabilization than it fiscal
> policy.
> The frictions that give slope to the expectational aggregate supply
> curve
> are key causes of business cycle fluctuations. The natural rate
> hypothesis
> has strong empirical support, and does mean that fluctuations are best
> analyzed as being about trend rather than being beneath potential.
> It is
> better to analyze macroeconomic policy by considering the long-run
> implications of rules. And any sound view of stabilization policy must
> recognize how limited are its possibilities for success.
>
> These insights survive, albeit under a different name than
> "Monetarism."
> Perhaps the extent to which they are simply part of the air that
> modern
> macroeconomists today believe is a good index of their intellectual
> hegemony.
>
What the fuck does all this amount to? A skepticism about fine- tuning? An appreciation of the limits to fiscal stimulus? For this we needed Milton Friedman?
Doug