The fundamental issues in the controversy of the policy paradigms: Policies, theories, and underpinnings
Whether or not paradigm (1), as a word, is or is not an overstatement, in this essay I will identify the differences between and the sources of two policy programs. From the journalistic (popular) standpoint, policy differences stand out most vividly when programs are compared. But often the real differences lie at the underpinnings. What are these underpinnings? Are they at the theory level (where most economists generally believe such matters start), or do they appear, as I believe, long before particular theories are selected and examined? Should one dispense with opening the examination at the theoretical level? Indeed, is the study of where to start (at the level of policy, at the level of theory, or even deeper) really the economist's problem? Had this better be left to methodologists and philosophers? I think not (2). I undertake a different course and suggest that we start not with the theories but with the consideration of two policy programs, which I will try to synthesize. Thereafter, I will use personal nouns to describe the theoretical tents housing these policies. Finally, I hope that we can agree on looking at the ground where the underpinnings are anchored. In so doing, I find myself in good methodological company. Hayek, for one, endorses this method (1). I term my two basic policy groups the Kiel-Schumpeter Policy Set and the Principal Keynesian Policy Set. The former I associate with the views of Herbert Giersch, although he has repeatedly suggested that he got them from his reading of the works of Joseph A. Schumpeter. The latter, as the concept is expressed, draws more than a little from Alan Coddington's metaphor, the Hydraulic Keynesians [Coddington, 1976, pp. 1263-1267].
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- Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
- Buiter, Willem H, 1981.
"The Superiority of Contingent Rules over Fixed Rules in Models with Rational Expectations,"
Royal Economic Society, vol. 91(363), pages 647-70, September.
- Willem H. Buiter, 1981. "The Superiority of Contingent Rules over Fixed Rules in Models with Rational Expectations," NBER Technical Working Papers 0009, National Bureau of Economic Research, Inc.
- Willem H. Buiter, 1983. "Measurement of the Public Sector Deficit and Its Implications for Policy Evaluation and Design (Mesure du dÃ©ficit du secteur public et ses implications pour l'Ã©valuation et l'Ã©laboration de la poli," IMF Staff Papers, Palgrave Macmillan, vol. 30(2), pages 306-349, June.
- Carson, Carol S, 1975. "The History of the United States National Income and Product Accounts: The Development of an Analytical Tool," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 21(2), pages 153-81, June.
- Giersch, Herbert, 1979. "Aspects of growth, structural change, and employment: A Schumpeterian perspective," Kiel Working Papers 89, Kiel Institute for the World Economy.
- Coddington, Alan, 1976. "Keynesian Economics: The Search for First Principles," Journal of Economic Literature, American Economic Association, vol. 14(4), pages 1258-73, December.
- Lester C. Thurow, 1985. "Public Expenditures and the Elderly," Eastern Economic Journal, Eastern Economic Association, vol. 11(1), pages 42-50, Jan-Mar.
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