A recent editor, Rupert Pennant-Rea, once described The Economist as “a Friday viewspaper, where the readers, with higher than average incomes, better than average minds but with less than average time, can test their opinions against ours. We try to tell the world about the world, to persuade the expert and reach the amateur, with an injection of opinion and argument.” Taken fom The Economist
In my introductory microeconomics class, I require students to write a book review in the style of The Economist. The Economist book reviews are so good that in many ways, once you have read the review you really don’t need to read the book–unless for pleasure of course! These reviews provide an excellent basis on which to decide if a particular book is worth your time. With respect to my class, I am very interested in reading the assignment because the book reviewed is Cocktail Party Economics. (Both The Economist and Cocktail Party Economics are published by Pearson.) Here is my promise to the class–I won’t read the names of the authors so my students can truly write in the spirit of The Economist (authors are anonymous). Opine away!
Blogging the General Theory: Guest blogger BF
OK, Liquidity Preference. The first thing to remember here is that while JMK acknowledges that the rate of interest does influence the rate of savings, he reckons that the primary determinant of savings is income. You’ll hear people complaining that Keynes’ theory of savings and consumption isn’t based on any kind of optimizing behavior but we’ve already seen that that criticism is wrong-headed – JMK’s saver was an intertemporal utility maximizer in all but the formal math. But there’s nothing inconsistent with that in the claim that fluctuations in income are the key factors behind fluctuations in savings in the short run. If you’re on an optimal lifetime asset accumulation path – accumulating savings to live off in retirement, perhaps – fluctuations in income are going to lead to adjustments in savings, especially if you haven’t been hit by any major shocks to your accumulated wealth.
Guest Blogging the General Theory: Chapter 13, Post 1
With Chapter 13 of GT we get into the “Interest and Money” part of The General Theory of Employment, Interest and Money. We also get into a bit of the book which caused a fair bit of dispute in 1936, for reasons which aren’t all that easy for us to understand today. Keynes regarded the material he was setting out in these next few chapters as a key part of his break with standard theory, and was, especially in Ch 14 and its Appendix, pretty stark in his criticisms of other economists. We’re getting into the material here which played a major role in Dennis Robertson’s break with JMK (Robertson and Keynes had been close collaborators in their early days as macro-money theorists, to the point where they were practically co-authors on each other’s writings – John Hicks referred to them as a partnership, and described their individual works through the 1920s as a series which belong together.). Being Keynes, JMK had no hesitation about making nasty remarks about other economists and, according to his critics at the time, no hesitation about distorting what other writers said. That’s a criticism which runs through the reactions to GT, especially Ch 19 and its Appendix, where he blasts Pigou’s theory of unemployment. But we’ll leave that until we reach it.