Saturday, December 01, 2012

Macroeconomics - IS/LM model

Economist and columnist Paul Krugman advises us to think in terms of models.  One of the simple and important models for Keynesian economists is the IS-LM model.  CIP began a discussion of it.  Fortunately, it is simple enough to understand, there is an excellent exposition here.  The four youtube videos take just under a half-hour to watch, but after that you are equipped to think about the economy in terms of this simple model.
Posted by Arun at 5:30 PM

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dwc's avatar

dwc · 637 weeks ago

Just run away from IS-LM models. Become skeptical of both neoliberal/monetarist school and and New Keynesianism. The best paradigm out there is a version of Post Keynesianism. In Blogosphere, it is called MMT (modern monetary theory). MMT is a culmination of many ideas and thinkers: Warren Mosler's soft currency economics; Abba Lerner's functional finance; post-keynesian endogenous money; how treasury and federal reserve operate; stock flow consistency models; sectoral balances; etc http://www.nakedcapitalism.com/2012/03/philip-pil... http://moslereconomics.com/mandatory-readings/
From philosophy perspectives, check http://winton.ashmus.ox.ac.uk/PastSeminars/Trinit...

Sure, one can model the economy whichever way they want. I would rather go with a model that has less anomalies and more explanatory power. In this sense, MMT is dead on.

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