History of Macro Doctrine… The Commanding Heights Keynes: Stabilize an inherently unstable economy; preserve liberal society –Macro-policy, not planning Hayek as counterweight to Keynes? –Macro-policy/welfare state the road to serfdom? –WWII: High tide of PLANNING: hypercharged economy … social consensus Austrian Methodology: reject equilibrium –Ceteris not paribus: other things change –Swedish school  similarly disequilibrium Hayek / Myrdal 1974 Nobel Prize

Schools of Economics LSE: teach economic science and the wisdom of socialism (a, b, all of the above?) U. of Chicago: endowed by J.D. Rockefeller –Bastion of enterprise capitalism –U. of Ilinois as counterweight MIT: Paul Samuelson / Robert Solow –Foundations of Economic Analysis –Principles of Economics Teaching Keynesian Economics Lawrence Summers’ “Keynesian Household”

Chicago School Milton Friedman: The Counterweight to Keynes Aversion to Keynes’ elitism Discredit activism: MV = PY vs. Y = C+I+ G –Studies in the Quantity Theory of Money, 1956 Cagan: stable M d in times of hyperinflation –A Theory of the Consumption Function, 1957 –A Monetary History of the United States, 1963 The Great Contraction –The Role of Monetary Policy, 1968

Carnegie – Mellon: A Chicago Satellite The Rational Expectations Revolution The Management Game: HMMS John Muth, 1963 Lucas – Rapping Supply Curve Lucas: Policy Ineffectiveness Prescott – Kydland –Real Business Cycles –Time Inconsistency Aside of the DM Miracle Erhard or Goldsmith – Dodge – Colm?