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 >> >>