Tuesday, November 27, 2012

How good do you all think the Hayek/Prescott-Lucas comparison is?

Peter Boettke has noted it in the past, but Bob Murphy doesn't seem to like it when Noah Smith makes the point more recently.

I think it's fair to say that Hayek's model is "frictionless", although that's not the stand-out feature. Hayek very much offers a real version of the business cycle. It's a "real business cycle" caused by monetary non-neutrality of course - and that is different. But most importantly, unlike Friedman, Lucas, Prescott (and a variety of others) returned to more Hayekian themes on the capacity of government to deal with the business cycle.

They're not Hayek of course. You can obviously find differences because they're different people! But within the mainstream, I think if you had to identify a re-emergence of Hayek it would be in these sorts of guys and these sorts of ideas.

btw - Solow writes on Hayek and Friedman here, and Evan shares an interesting Harvard Press blog post on Burgin's book here.

1 comment:

  1. I think it's fair to say you know nothing of Hayek's explanatory project.

    Daniel writes,

    "I think it's fair to say that Hayek's model is "frictionless""

    ReplyDelete

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