I can’t resist

The prominent Keynesians are pretending that they don’t understand the basic resource constraints, or that resources are free on the margin, so that the government can reallocate with little cost.

The prominent non-Keynesians are viewing resources as costly, and claiming that the resource constraints bind, but also pretending that there are no frictions that the stimulus will fix. That is, we cannot fix the problems in resource allocation by stimulating.

The Keynesians don’t have a good economic explanation for the frictions, nor do they really know the magnitudes. But neither do the non-Keynesians, nor do they have a empirically founded model yet.

All this is like a bad dream of when I was a graduate student. Arguments about big things, based on little empirical evidence on either side. At least in those days, we were learning about new channels that could drive things, and knocking out inconsistent explanations.

The Keynesian model broke down in the 1970s–it stopped working. There is no non-Keynesian model that works for policy work with any fiscal stimulus, yet.

Good luck.

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