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Keynesian Dominance in Crisis Therapy

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  • Kristina Spantig

    (Graduate Programme "Global Financial Markets")

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    Abstract

    This paper scrutinizes the debate of Keynes and Hayek concerning the adequate re- sponse to economic crises from a historical perspective. In a first step the develop- ment of the Keynesian economic theory, its ascent during the Great Depression and its use during financially sound times is analyzed. In a second step the Hayekian cri- tique to discretionary government intervention and its long run consequences is scru- tinized. In the last step it is analyzed why, in the wake of a crisis, short-run oriented Keynesian therapy dominates long-run Hayekian therapy as in the most recent crisis.

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    File URL: http://pubdb.wiwi.uni-jena.de/pdf/wp_hlj45-2013.pdf
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    Bibliographic Info

    Paper provided by Friedrich-Schiller-University Jena in its series Global Financial Markets Working Paper Series with number 45-2013.

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    Date of creation: 22 Aug 2013
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    Handle: RePEc:hlj:hljwrp:45-2013

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    Web page: http://www.gfinm.de

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    Keywords: Keynes; discretionary fiscal policy; monetary policy;

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    1. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    2. John C. Williams, 2011. "Unconventional monetary policy: lessons from the past three years," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct3.
    3. Mathilde Maurel & Gunther Schnabl, 2011. "Keynesian and Austrian Perspectives on Crisis, Shock Adjustment, Exchange Rate Regime and (Long-Term) Growth," Global Financial Markets Working Paper Series 18-2011, Friedrich-Schiller-University Jena.
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    13. John B. Taylor, 2007. "Housing and monetary policy," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 463-476.
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    15. Peter M. Summers, 2005. "What caused the Great Moderation? : some cross-country evidence," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-32.
    16. Milton Friedman, 1961. "The Lag in Effect of Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 69, pages 447.
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    18. Giovanni Callegari & Giovanni Melina & Nicoletta Batini, 2012. "Successful Austerity in the United States, Europe and Japan," IMF Working Papers 12/190, International Monetary Fund.
    19. Temin, Peter, 2002. "The Golden Age of European growth reconsidered," European Review of Economic History, Cambridge University Press, vol. 6(01), pages 3-22, April.
    20. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why Keynes dominates Hayek
      by Economic Logician in Economic Logic on 2013-10-28 14:43:00

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