William White on a Keynesian-Austrian Synthesis

Jorge Nascimento Rodrigues interviews William White, the former chief economist at the BIS and currently employed by the OECD, about a Keynesian-Austrian synthesis. White suggests that Keynesians need to drop "neo-Keynesianism" and incorporate more of the Austrian School and Minsky. He makes the same case in an earlier paper here.

It was an interesting read, but I thought a little lacking. The most he took from the Austrian school was a warning against pro-cyclical policies. That's fine, but its not really exclusively Austrian. Who does support pro-cyclical policies? Nobody that I'm aware of. It's also very unclear about where he comes out on policy - he seems to forcefully advocate fiscal policy, but then he seems to only incorporate the Austrians as a caution against fiscal policy (except for one point where he briefly alludes to Hayek on secondary depressions).

He seems to be heavily influenced by Axel Leijonhufvud, and is thus not sympathetic to Hicksian Keynesianism. The fact is, Keynes was not sympathetic to Hicksian Keynesianism either, but I personally think that was a mistake.

I've said in the past quite clearly that I think what the Austrians bring to the synthesis is a treatment of the structure of production as it relates to interest rates. Keynes himself thought that basic idea made sense (see section 2). He just didn't think it seemed like a substantial enough process to form the centerpiece of an economic theory (and I tend to agree with him on that). So White ends up not even mentioning what I think is probably the most important piece that the Austrians bring, dropping one of the more important advances in Keynesianism, and being generally wishy-washy about implications. Still - it's another voice in the chorus noting that Keynesianism and the Austrian school need not be at war - we just have to be smart about integration.