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Paul Krugman's "Liquidity Trap" and other Misadventures with Keynes

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Abstract

In recent blog posts, Paul Krugman proposes a heuristic model to analyse the advanced country macroeconomic situation circa 2014. An earlier version focusing on Japan is much more formalized with the usual New Keynesian paraphernalia. Despite Krugman's claims to the contrary, the analysis is not really Keynesian, at least in comparison to the General Theory or GT. It does hark back to the world of the turn-of-the-twentieth-century Swedish economist Knut Wicksell and contemporaries and followers such as Irving Fisher, James Tobin, and Robert Mundell.
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  • Lance Taylor, 2013. "Paul Krugman's "Liquidity Trap" and other Misadventures with Keynes," SCEPA publication series. 2013-4, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepapb:2013-4
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    1. Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
    2. Robert Mundell, 1963. "Inflation and Real Interest," Journal of Political Economy, University of Chicago Press, vol. 71(3), pages 280-280.
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    2. Stefano Di Bucchianico, 2018. "A Note on Krugman's Liquidity Trap," UMASS Amherst Economics Working Papers 2018-17, University of Massachusetts Amherst, Department of Economics.

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    JEL classification:

    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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