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 | | Time and Money: The Macroeconomics of Capital Structure (Foundations of the Market Economy Series,) by Roger Garrison ISBN-10: 9780415079822 ISBN-10: 0-415-07982-9 ISBN-13: 9780415079822 ISBN-13: 978-0-415-07982-2 Hardcover 2000-11-30 Routledge Find Lowest Price |
Editorials | ||
Product Description The primary focus of this volume is the intertemporal structure of capital, an area that has until now been neglected in favor of labor and money-based macroeconomics. | ||
Reviews | ||
Austrian theory made simple for mainstream macroeconomists Austrian economics are often rejected by mainstream economists because they do not use mathematics and graphical analysis. Therefore, some great insights and ideas of authors such as von Mises, Hayek and Rothbard are neglected. Yet some austrian ideas can easily be paralleled with mainstream theories. For instance, the role of monetary inflation in monetarist macroeconomics, the role of expectations, and the difference between short term and long term Philips curve. All of these are coherent with the austrian theory. But austrian theory has a distinct approach when it discusses the role of inflation in terms of distortions of the structure of production. This leads to a new vision of recessions, as a necessary evil to cure the malinvestments of the boom. Dr Garrison has developed a pedagogical tool in the form of a graphics, integrating the loanable funds demand/supply chart, the potential production frontier and the hayekian structure of production triangle. Thanks to this familiar approach, his tool is used to present the austrian theory in terms immediately understandable by economists trained in mainstream macro. The book studies several real life cases, such as the business cycle, fiscal policy, budget deficits, etc. | ||
Garrison overlooks the D-Zmodel of chapter 20( 21) of the GT Garrison(G)comes as close as Allan Meltzer did ,in his 1989 book on Keynes, to writing a definitive ,balanced critique of the General Theory(1936;GT).Unfortunately,Garrison failed,like Meltzer,to integrate the mathematical generalization of classical and neoclassical(c-nc) theory presented by Keynes in chapters 20 and 21 of the GT.The major conclusion of Keynes's analysis,which I will present below,establishes the special case nature of c-nc theory.Garrison appears to be the first academic economist to have grasped the necessity to explicitly(Samuelson[1948] and Meltzer[1989] present a rudimentory discussion) make use of production possibilities frontier curves(PPF'S)in order to grasp diagramatically what Keynes's argument was.Throughout this book(see,for example,pp.43-45,137-139,and chapter 7),Garrison carefully attempts to present Keynes's case while ,at the same time,contrasting that case with the case for Hayek,all the time resorting to an exposition based on PPF'S.Essentially,Keynes emphasizes what can go wrong in a capitalist production framework while Hayek emphasizes what can go right.Garrison is mistaken on p.170 when he claims that Keynes's liquidity preference theory has no effect on the total production of consumption and investment goods.Garrison's error is in concentrating only on the Y-multiplier model of chapter 10.Keynes uses both the Y-multiplier and the D-Z models of chapters 20 and 21 to derive the following result:w/p=mpl/(mpc+mpi),where w/p is the real wage,mpl is the marginal product of labor derived from an aggregated neoclassical production function,mpc is the marginal propensity to spend on consumption goods ,and mpi is the marginal propensity to spend on investment goods.If mpc+mpi<1,you automatically obtain any one of a number of different possible unemployment equilibriums,each associated with a certain amount of involuntary unemployment where it will be impossible for labor,as a whole,to cut its money wage.The major reason for this is liquidity preference as a response to uncertainty and ignorance.Keynes(A Treatise on Probability,1921,chapter 26), Ellsberg(Risk,Ambiguity and Decision,2001,1963) and Dixit-Pindyck ("real options" approach) are the only economists who have provided technical analysis that would allow the impact of uncertainty and ignorance on aggregate investment to be incorporated in formal,decision theoretic models at the macroscopic level.Garrison,like Hayek before him,is unable to formally model the impact of uncertainty and ignorance on investment at the macroscopic level.Garrison repeats the errors of Hayek in attempting to discuss a theory of capital that abstracts from uncertainty.Garrison is ,of course,correct that if there is no uncertainty(ambiguity)then there will be no involuntary unemployment. Only in the case where mpc+mpi=1 will the c-nc theory be operational.As pointed out by G,this is some point on the PPF boundary.This is where neoclassical and Austrian economic theory comes into play-explaining the underlying process over time that results in the picking of a (the) particular mix of consumption and investment goods,given resource scarcity,that businessmen will produce for sale in a free market. | ||
Time and Money - New ground in Macroeconomic Modelling Finally, an Austrian School based model of the macroeconomy. Time and Money pulls free market theory together to show that capitol drives the economy and not government, as mainstream economic theories would lead us. Powerful yet easy to read and understand. Well worth your time and money. | ||
Absolutely Incredible For anyone interesting in Austrian macroeconomic theory, this is the book for you. (...) | ||
Worth the Time-Too much Money "Time and Money" combines a new graphical depiction of competing theories of unemployment and trade cycles with standard Subjectivist arguments in this area. The authors'"loose joint" theory of trade cycles is an extension of arguments made by Austrian economists Ludwig Von Mises and Friedrich Von Hayek. Garrison also critiques the ideas Keynesians and Monetarists. One of the key strengths of the graphics in this book is that it focuses attention on under appreciated elements of subjectivist-Austrian trade cycle theory. These graphs clarify the effects that interest rates have on household decisions on saving and consumption. Also, the graphs facilitate comparisons between different schools of thought. This book has little that is really new in the Subjectivist theory of the trade cycle and its associated critiques of competing theories in this area. By in large, this book organizes material from other books and articles, many of which are by Garrison. The primary value of this book is in its organization and presentation of this alternative explanation of the trade cycle and unemployment. This book is important because it facilitates the dissemination of a viable explanation of important economic phenomena. The need for this dissemination is both internal and external to the Subjectivist school. Many members of the Subjectivist school promote this theory without fully understanding it. Those outside of the school tend to ignore this theory completely. These two facts are closely related. Clear representation of these ideas is an essential part of the effort on the part of Subjectivists to regain their former place among the mainstream of the economics profession. By doing this in his book, Garrison has made great progress in reducing the costs of learning about Subjectivist Capital/Trade Cycle theory. A lower money price for this book would extend this process further. | ||