Economics 311:  IS-LM

Link to slides

Read:  

• Paul Krugman on why IS-LM is the way to think about these issues (New York Times, October 9th, 2011)

• How is Investment Demand doing?  

• What is the interest rate?  Well...that depends....

  • Yield Curves:  Usually long term interest rates are higher than short term interest rates, but sometimes the relationship is reversed, and when it is...that's a warning sign of recession!  (Here is another cool animation)

  • US Treasury Yield Curve

For Interest:  

For interest:

• • J. R. Hicks, "Mr. Keynes and the 'Classics':  A suggested interpretation", Econometrica, April, 1937

  • Letter of advice from Keynes to President Franklin Roosevelt, February 1, 1938, and a reply.  Here it is in text form. 

• Time Magazine rated Keynes one of the Top 100 Thinkers of the Twentieth Century, but then they've been fans since 1923.

• The General Theory of Employment, Interest and Money (1936)  PDF, PDF w/o footnotes, Text 

  • Sir John Hicks, "Mr. Keynes and the Classics" (1937) Econometrica

• Milton Friedman wasn't much of a fan of Keynes.

The Great Depression

• Cool, short montage about the Great Depression (from HBO's Carnivale).  It really captures how severely and universally things were going to hell

• Like Obama, Franklin Roosevelt's predecessor left him a big mess

  • Hoover was a very smart engineer and businessman, who didn't have good economists.  

  • It got really scary in 1932 when veterans from World War I marched on DC to demand the bonus they'd been promised.  More on the Bonus Army

  • General MacArthur (and Eisenhower) turned the troops loose on them and their squatter huts, and the film of it played in newsreels all across America.  

• At the same time, the environment was turning much of the midwest into the surface of the moon

  • The Dust Bowl...we could see that we weren't taking very good care of the environment...but how bad could things really get?  Oh....

• FDR got elected, and gave his inaugural address on March 4, 1933

  • "So first of all let me assert my firm belief that the only thing we have to fear. . .is fear itself. . . nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."

• Diary entries from the Great Depression (Washington Post, Nov. 1, 2009)

For amusement

• "Fear the Boom and Bust" - Keynes vs Hayek Rap Anthem  (Not as bad as you might think.)

  • Cliff-Notes for the economics behind this.

  • Keynes versus Hayek, Round 2.0!  (Yet more econ rapping.)

• Keynes cartoon

• Keynes was an incredible quote machine!

• The American Consumption Function

• Keynes's sex diaries.  Eeewwwweee.  Who does that?  Keep a diary?  

• Mr. Boffo