Monday, June 5, 2017

A Belated Reply to Janet Yellen's 1980 Critique of Post-Keynesian Economics

Brad Delong is in the excellent habit of reposting some of his older pieces, including a ten-year old post entitled “Keynesian Economicses and the Economicses of Keynes.”  Although Brad doesn’t mention it in his 2007 post, Janet Yellen wrote a harsh critique of Post-Keynesian economics in 1980, which was entitled “"On Keynesian Economics and the Economics of the Post-Keynesians".  I read Yellen’s 1980 paper recently and decided to write a reply. Here’s the abstract:

"Thirty years before Janet Yellen became Chair of the U.S. Federal Reserve, she wrote a blistering polemic entitled 'On Keynesian Economics and the Economics of the Post-Keynesians' (1980).  Ms Yellen criticized the Post-Keynesian theory of output and income distribution, vigorously defended the neoclassical synthesis, and extolled the virtues of the 'standard Keynesian IS-LM model.'  In this belated reply, I respond to Yellen’s criticisms of Post-Keynesian economics, expose some flaws in her own distinctive version of the IS-LM model, and outline a few implications of Ms Yellen’s ironic epiphany, 'A Minsky Meltdown: Lessons for Central Bankers” (2009)' for contemporary debates in macroeconomics."