Working Paper: NBER ID: w16631
Authors: Matthew N. Luzzetti; Lee E. Ohanian
Abstract: This paper studies why the General Theory had so much impact on the economics profession through the 1960s, why that impact began to wane in the 1970s, and why many economic policymakers cling to many of the tenets of the General Theory. We discuss three key elements along these lines, including the fact macroeconomic time series through the 1960s seemed to conform qualitatively to patterns discussed in the General Theory, that econometric developments in the area of simultaneous equations made advanced the General Theory to a quantitative enterprise, and that the General Theory was published during the Great Depression, when there was a search for alternative frameworks for understanding economic crises.
Keywords: No keywords provided
JEL Codes: E12; E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Government spending (H59) | Employment (J68) |
| Expectations (animal spirits) (D84) | Capital investment (E22) |
| Wartime spending (H56) | Employment (J68) |
| Wartime spending (H56) | Output (Y10) |
| Methodological advancements (C90) | Acceptance of Keynesian economics (E12) |
| Rational expectations and supply-side economics (E65) | Decline of GT's influence (F69) |