IS-LM – here we go again
from Lars Syll
What is Paul Krugman‘s favourite macroeconomic model – IS-LM – all about? Steve Keen gives a pedagogical exposition.
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In 1979 I convinced John Hicks that the IS-LM model had little or nothing to do with Keynes.
In the Journal of Post Keynesian Economics (winter 1980-81 issue) I published an article byJohn Hicks entitled “IS-LM: An Explanation”. In this article, Hicks explicitly states that the IS-LM model is not Keynes and tries to explain why he developed this model without really understanding what Keynes and his liquidity theory was all about.
This article by Hicks should be required reading by anyone who proclaims to understand macroeconomics! Maybe even Paul Krugman.
Paul Davidson
Paul, can you provide an open access link to Hicks’ paper?
maybe Robert Lucas and Steve Keen would gain more insight if he also read Hicks’s 1980-81 “IS-LN: An Explanation” article published in the Jpournal of Post Keynesian Economics
I totally agree, Paul, and actually have a post up on my blog re Krugman and his – especially given Hicks later reevaluation of it – strange obsession with the IS-LM model: http://larspsyll.wordpress.com/2012/10/14/paul-krugmans-pathetic-is-lm-obsession/