Sorry to interrupt, but what do these undergraduate macro exercices have to
do with scholarship in the history of economics?
Could we just stick to reference sharing?
For a depiction of the criticism of state intervention and central bank
regulation in the aftermath of the 2008 crisis, see:
P Mirowski, E Nik-Khah, 2013, "Private intellectuals and public perplexity:
The economics profession and the economic crisis", History of Political
Economy 45 (suppl), 279-311
and
P. Mirowski, 2013, Never Let a Serious Crisis Go to Waste: How
Neoliberalism Survived the Financial Meltdown, Verso.
Regards,
Yann G.

2018-09-01 16:59 GMT+02:00 Alan G. Isaac <[log in to unmask]>:

> Given logical proof that the accountants have misled us and as a
> simple logical matter the government budget must always
> be in balance (see below), let's start at the other end!
> Simply assume that G=T.
> So since Y=C+I+G, we must conclude that
> Y-T = C + I
> Introduce (and why not?!) the behavioral assumption C = b(Y-T) and we
> can conclude that
> (1-b)(Y-T) = I
> Now for the coup de grace.
> Introduce (and why not?!) the behavioral assumption I = (1-b)(Y-T) and we
> have
> (1-b)(Y-T) = (1-b)(Y-T)
> or
> 0=0.
> Even among the most stubborn and misguided Keynesians,
> who will dare deny *this*?!  (Of course because they admit to being
> Keynesians, we suspect they might try, but the force (of the argument)
> is with us!)
>
> Evidently, from simple economic foundations we have deduced
> irrefutable eternal truths!  And should one of our Keynesian colleagues
> try to object, we can now just say, "look at the algebra my friend".
>
> Alan Isaac
>
>
>
>
> On 8/31/2018 1:04 PM, Fred Foldvary wrote:
>
>> Steve Kates <[log in to unmask]> seeks a rebuttal to the Keynesian
>> multiplier.
>>
>>
>>
>> The Keynesian multiplier is 1/(1-b).
>>
>> As I see it, the derivation is:
>>
>> T is taxes that pay for G, government spending.
>> b is the portion of income Y that is spent for consumption C.
>> I is economic investment.
>>
>> Y = C + I + G[
>> C = b(Y-T)
>> Y = bY -bT + I + G
>> Y-bY = I + G - bT
>> Y(1-b) = I + G -bT
>> Y=(I+G-bT)/(1-b)
>>
>> That assumes constant I.
>> If investment I is a function of savings, then
>> I = (1-b)(Y-T)
>> Substitute into the third equation:
>> Y = bY -bT + (1-b)(Y-T) + G
>> Which concludes with
>> G=T
>>
>> The multiplier disappears, and there is no determination of Y from 1/(1-b)
>>
>> Fred Foldvary
>>
>>