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David Comerford
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Keynes was wrong about this because of land values and house prices. We are in a zero sum competition to obtain monopoly rights on a particular plot of land. The rate of economic growth has almost nothing to do with the proportion of total resources we are willing to spend on this. And if the next guy works 40hrs a week and we're competing for land, then I better work 40hrs too.
Toggle Commented Nov 18, 2015 on Keynes' error at Stumbling and Mumbling
Wonderful post. See also
My position (research only, no teaching) is at Stirling, but I live near Zürich and "work from home" Thanks for your comment.
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What about devaluation? Using data from BIS (, there is a strong negative correlation between the CAPB and devaluation. If devaluation is associated with high NGDP growth (which seems plausible) but under floating exchange rates occurs at the same time as austerity, then austerity could be ceteris paribus contractionary, but we would not see any such effect under floating rates - so e.g. in Iceland we see austerity (contractionary) and devaluation (expansionary) and overall not much impact on NGDP. In Eurozone countries we see only the ceteris paribus effect of austerity.
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Jun 23, 2014