Friday, August 19, 2011

link here to article

The Economics Department at the University of Chicago has had a mission to put an end to Keynesian Economics. One of its basic tactics is to find reasons why the business cycle is determined by supply factors rather than by changes in aggregate demand. This article describes how one of the Chicago economists has attempted to make that case and it provides a critique of evidence used to support the claims. Paul Krugman takes this criticism one step further and argues that he does not understand the fallacy of composition. If one group does something that is good for that group, it does not follow that it would be good for the entire population of groups. Every group in the population cannot have below average wages.

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