- Keynes is Wicksell above the natural rate and Hayek is Wicksell below the natural rate. I generally agree. Both of course added interesting elaborations too - Keynes to the determination of the interest rate itself and Hayek to the mechanisms through which departures from the natural rate operated.
- He thinks Garrison should stand on his own two legs, without Hayek. This was a very intriguing point. I don't know if I agree but I liked it. When you read Hayek it's actually surprising how hard it is to translate into modern macroeconomic diagrammatic thinking. I found myself frustrated with the lack of a sense of production fontiers and aggregate output. When people read Hayek and don't have this problem I think it's because they're unintentionally reading Garrison into Hayek. But if you take a look at the way Hayek actually put it, this is a contribution of Garrison's - it's not something that comes out naturally in the original. So in that sense I like Hayekian Garrison. But it's definitely a neat idea. Gene is emphasizing the sustainable production frontier. In a lot of ways, we can thinking about the sustainable production frontier as a way of characterizing dynamic equilibrium in a static presentation - without the system of differential equations that can make that less accessible. I think Gene is right - that's pretty cool.
- And today, he points out Keynes's appreciation of Cantillon effects. He is thinking about the Treatise here, but as I've pointed out in the past (here, here, and I think some other places) Cantillon effects are acknowledged as being very real in the General Theory too, just not the decisive factor in the business cycle. I for one think the empirical evidence suggests they're real. I'm just not sure they carry the significance a lot of Austrians think they do.
Praxeology, History and Foreign Policy
1 hour ago