Keynesians, Monetarists, and Minskyites: Opening of September 13, 2010 U.C. Berkeley Econ 1 Lecture

Keynesians

Last time we ran through two types of recessions, “Keynesian” type and “monetarist” type—the one we saw in 2002 and the other we saw in 1982.

In a “Keynesian” downturn the fundamental financial excess demand in the economy is an excess demand for bonds: an excess of (planned) savings over business investment. Households try to shift their spending from purchasing current goods and services to purchasing bonds and other investment vehicles to carry purchasing power forward into...