Keynes, Hayek, and the Wicksell Connection

Tyler Beck Goodspeed

in Rethinking the Keynesian Revolution

Published in print September 2012 | ISBN: 9780199846658
Published online September 2012 | e-ISBN: 9780199950126 | DOI:
Keynes, Hayek, and the Wicksell Connection

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The chapter concludes by introducing the standard “New Keynesian” dynamic stochastic equilibrium model, emphasizing the ways in which it departs from the Wicksell-Keynes-Hayek connection. In particular, the chapter focuses on the absence of the problem of intertemporal coordination, central to the Wicksell-Keynes-Hayek story, from the New Keynesian model. The chapter then relates this issue to the larger problem of integrating time into general equilibrium models, a point raised during, but largely obscured by, the protracted and often acrimonious debates of the Cambridge Capital Controversies. The chapter thus concludes by suggesting a Wicksell-Keynes-Hayek research agenda focusing on disequilibrium dynamics, and the central role of money in permitting such out-of-equilibrium processes.

Keywords: time; money; New Keynesian model; intertemporal coordination; Cambridge Capital Controversies; disequilibrium dynamics

Chapter.  4639 words.  Illustrated.

Subjects: Economic Systems

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