Lets get straight how Keynes got the model wrong. The multiplier Keynes thinks was always greater than one was the structural sector ratio during positive growth. In that model, sectors can gain or lose on the margin while still having positive flow, we are in the corridor. That multiplier is invalid during a negative or low growth economy; an economy in transition from one corridor to another.
There is still a stimulus effect available, but it is derived from the relative independence of the sectors during negative growth, they are decoupled. The stimulus effect occurs because government is a hegemon and the magical powers derive from its ability to rearrange the growth portfolio during negative growth periods.
No comments:
Post a Comment