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Samuelsonian Economics and the Twenty-First Century$
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Michael Szenberg, Lall Ramrattan, and Aron A. Gottesman

Print publication date: 2006

Print ISBN-13: 9780199298839

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780199298839.001.0001

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Prospective Shifts, Speculative Swings: “Macro” for the Twenty-First Century in the Tradition Championed by Paul Samuelson

Prospective Shifts, Speculative Swings: “Macro” for the Twenty-First Century in the Tradition Championed by Paul Samuelson

Chapter:
(p.66) 4 Prospective Shifts, Speculative Swings: “Macro” for the Twenty-First Century in the Tradition Championed by Paul Samuelson
Source:
Samuelsonian Economics and the Twenty-First Century
Author(s):

Edmund S. Phelps (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199298839.003.0005

This chapter presents Samuelson's economics from the expectation and uncertainty points of view. It applies Samuelson model for stagflation, for instance, to show how shifts in the underlying parameters that affect inflation and unemployment could cause swings in an economy. Economies are driven by ‘visions’ and ‘fear’, which require a disequilibrium paradigm, as it was advocated by Keynes in Chapter 12 of his General Theory. The latter underlines Samuelson's brand of expectation and uncertainty. Such a view of the economy cannot be captured in a rational expectation model, as ‘personal knowledge’ of the economic agents cannot be made public for analysis. Samuelson's model has the potential to capture big swings in the economy unlike the rational expectation point of view, which requires vibration around a saddle point.

Keywords:   uncertainty, expectation, vision, fear, stagflation, disequilibrium, General Theory

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