I have a brief quote in my new column on the Keynes comeback from the University of Chicago’s Robert Lucas, who in 1980 declared Keynesianism not just dead but laughable (“At research seminars, people don’t take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle to one another.”) and later won a Nobel for his efforts. Here’s his fuller response, from an e-mail:
Well I guess everyone is a Keynesian in a foxhole, but I don’t think we are there yet. Explicitly temporary tax cuts do nothing: people just bank them. Supply side tax cuts are fine with me, but they take time to work and at some point we need the revenue to run the government.
I feel the current situation requires a lender of last resort but not a fine tuner.