Strange defeat: How the new consensus in macroeconomics let austerity lose all the intellectual battles and still win the war

Mason, J. W. and Jayadev, Arjun (2013) Strange defeat: How the new consensus in macroeconomics let austerity lose all the intellectual battles and still win the war. Economic and Political Weekly, 48 (32). pp. 102-111. ISSN 2349-8846

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Abstract

Macroeconomics in the United States today appears to be a site of intense controversy between supporters of more aggressive stimulus measures and supporters of austerity. These policy debates, while important, tend to obscure the strong methodological and theoretical consensus in the economics profession today. All major schools of mainstream macroeconomics are committed to a vision of the economy in which rational agents choose the optimal path over time, and in which any sources of instability are fully offset by a benevolent central bank, at least in normal times. These core intellectual commitments of modern economics have contributed to the weakness of efforts to reduce unemployment in the US and Europe. This paper first describes the intellectual failure of the most prominent arguments for austerity, and then argues that the deeper consensus in macroeconomics has nonetheless made it difficult to make consistent arguments for sustained deficit spending or for making lower unemployment a high priority relative to other macroeconomic goals.

Item Type: Article
Authors: Mason, J. W. and Jayadev, Arjun
Document Language:
Language
English
Uncontrolled Keywords: Macroeconomics, United State, Macroeconomics Policy, Modern economics.
Subjects: Social sciences > Economics
Social sciences > Economics > Macroeconomics & related topics
Divisions: Azim Premji University > School of Arts and Sciences
Azim Premji University > Research Centre > Centre for Local Democracy
Full Text Status: Public
URI: http://publications.azimpremjifoundation.org/id/eprint/382
Publisher URL: https://www.epw.in/journal/2013/32/special-article...

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