Thursday, June 17, 2010

Rizzo on Keynesian Policy

I think Mario Rizzo, of NYU, is probably the most insightful Austrian out there today that I know of. He has a very interesting post this morning on the nitty gritty implementation of Keynesian policy. And he makes a point that I've made in the past that I think is lost on a lot of people: The General Theory provides a theory of output determination - not of the business cycle. It has to be understood as an underproduction theory, not a cycle theory. There's lots of good cyclical theories that are very amenable to Keynesianism, but that's not what the heart of Keynesianism is.

Anyway, in terms of his discussion of policymaking itself, I think Rizzo is worrying a little more than he has to. You can see my thoughts in the comments.

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