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Been There Done That: The Political Economy of DéJà Vu

THE GLOBAL FINANCIAL CRISIS: ALTERNATIVE PERSPECTIVES ON WHAT WE HAVE LEARNT, pp. 14-45, Steven Kates, ed., Cheltenham: Edward Elgar Publishing, 2011

32 Pages Posted: 6 Dec 2010 Last revised: 21 Feb 2012

Peter J. Boettke

George Mason University - Department of Economics

Daniel J. Smith

Sorrell College of Business, Troy University

Nicholas A. Snow

Wabash College - Economics

Date Written: August 1, 2010

Abstract

In the midst of the current financial crisis the economics profession has seen a monumental resurrection of Keynesian ideas. The debate, which Keynes started back in the 1930s, is being picked up again, not where it left off, but in exactly the same place it started. While Keynesian theories were carefully critiqued by new classical economists and in the most part discarded by the profession, Keynesian models and prescriptions became a staple of politics and macroeconomic textbooks. Obviously, neither side of the debate articulated their views adequately and on the same terms. If the economics profession is going to escape this perpetual déjà vu of cycling through the same debate every time an economic crisis emerges, the profession must discard entrenched ideologies and turn back to the sound but creative application of basic economics.

Keywords: Financial Crisis, Keynesian Economics, Inflation, Housing Bubble, Regime Uncertainty, John Maynard Keynes

JEL Classification: A11, B53, N40

Suggested Citation

Boettke, Peter J. and Smith, Daniel J. and Snow, Nicholas A., Been There Done That: The Political Economy of DéJà Vu (August 1, 2010). THE GLOBAL FINANCIAL CRISIS: ALTERNATIVE PERSPECTIVES ON WHAT WE HAVE LEARNT, pp. 14-45, Steven Kates, ed., Cheltenham: Edward Elgar Publishing, 2011. Available at SSRN: https://ssrn.com/abstract=1720661 or http://dx.doi.org/10.2139/ssrn.1720661

Peter J. Boettke (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

Daniel J. Smith

Sorrell College of Business, Troy University ( email )

137 Bibb Graves Hall
Troy, AL 36082
United States

HOME PAGE: http://www.danieljosephsmith.com/

Nicholas A. Snow

Wabash College - Economics ( email )

P.O. Box 352
Crawfordsville, IN 47933-0352
United States

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