MAC03 Keynes

In this third lecture, we will directly study the Keynes book: General Theory of Employment, Interest and Money -- GTEIM

Wednesday 12th Sept 2018

Read the FIVE articles listed below as IMF00, IMF01, IMF02, IMF03, IMF04 -- The controversey between Keynes and the Treasury is just as ALIVE today as it was in earlier times -- WHY do we not have understanding on this matter? It is because of failed economic theories, which prevent us from understanding the mechanisms which drive the economy

Thursday, 13th Sept 2018

1: Experiment on Paradox of Thrift to be done in class between 8:30am and 10:30am -- [[PURPOSE of Experiment: after doing this, you should be able to read Keynes GT Chapter 2 and understand what he is saying much better. You should understand what Say's Law is and WHY it does not hold in a monetary economy.]]

2: Read MACL02.docx, which summarizes the background L5-L8. L5-L7 was already assigned last time -- review to refresh your memory. Read L8 which was not assigned last time. These four posts provide a condensed summary of the Brian Ferguson paper on the background for Keynes. NOW you should be able to go ahead and read this paper, and understand what it is saying. I will assign some students to prepare an outline of the Ferguson paper.

Friday, 14th Sept 2018

1. Read Summary and then View Lecture on the Search for Knowledge -- which explains how Islamic concept of knowledge is different from Western concept, and how this makes a great difference in the whole process of education.

2. Solve Problem Set on Paradox of Thrift -- Experimental Approach (I have REMOVED the problem set, and PROVIDED a SOLUTION SET -- study it CAREFULLY).

Sat/Sun 15-16 Sept 2018

Read Keynes General Theory, Chapters 1 and 2. STUDY the word document Thought Experiments attached below.

Monday 17th Sept 2018

Study Keynes General Theory Chapters 1 & 2, and also Thought Experiments -- COPIED on WEA Pedagogy Blog Post: Simple Model Explains Complex Keynesian Concepts This creates a simple model in which we can explain complicated ideas of Keynes within a practical real world example which can easily be understood.

Questions for Final Exam:

1. Explain why Supply Siders argue that if Government starts Infrastructure projects, this will not help to increase employment, while Demand Siders (Keynesians) say that this will help.

2. There are three commonly used arguments against Keynesian fiscal policy. One is about the LAGS - delays in implementation of projects. The second is the Treasury view about encouraging irresponsible behavior. The third is the crowding out argument. Explain all three of them.

3. Also provide an assessment: in light of these arguments, should we use fiscal policy to reduce unemployment? If so, how can we do it to avoid the three difficulties mentioned.