【正文】 italism, we also brought back some of its vices, most notably a vulnerability both to instability and sustained economic slumps. Unit Six The Return of Depression Economics — Paul Krugman Exercise 2 Exercise 3 :c Narrowest:a :b Narrowest:a :b Narrowest:c ? Ⅳ . Answer key for Writing research papers 。 so do the solutions. We had better all start relearning our Depression economics. Unit Six The Return of Depression Economics — Paul Krugman It’s the Short Run , Stupid BEFORE THE 1930s most economists regarded the business cycle—the alternation of recessions and recoveries—as a relatively minor issue. Whatever the causes of such fluctuations, economists believed that slumps were selfcorrecting and that the economy always tended to restore full employment in the long run. Hence, the fundamental economic problem was to ensure that resources were used efficiently, not to ensure that they were used at all. True, as early as 1923 John Maynard Keynes famously took his colleagues to task, admonishing them not to ignore the short run: Unit Six The Return of Depression Economics — Paul Krugman This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the sea is flat again. But not until the Great Depression did economists realize that “short run” shortfalls of demand were crucially important. Perhaps slumps were still self correcting in the long run, but would the economy survive to reach that long run? Given the experience of the Depression, one might have thought that classical economics was gone for good. But the success of Keynesian economics in damping down the business cycle meant that the old focus on the full employment long run could reemerge with a new justification. It was once again Unit Six The Return of Depression Economics — Paul Krugman reasonable to assume that the economy would always tend quickly back to full employment—not because of any automatic mechanism but because intelligent policymakers would use moary and fiscal policy to get it there. Like traditional European wine grapes that survived the great phylloxera epidemic by being grafted onto Americanroot stock, classical economic theory survived the Great Depression by being grafted onto the assumption that activist moary and fiscal policy would ensure more or less full employment. In the 1950s Paul Samuelson dubbed the resurrection of classical fullemployment economic theory the “neoclassical synthesis.” It remains to this day the position of those who appreciate but do not worship free markets. Here, for example, is what I wrote in Slate two years ago in an article entitled “Vulgar Keynesians”: Unit Six The Return of Depression Economics — Paul Krugman In reality the Federal Reserve Board actively manages interest rates, pushing them down when it thinks employment is too low and raising them when it thinks the economy is overheating. You may quarrel with the Fed chairman’s judgment—you may think that he should keep the economy on a looser rein—but you can hardly dispute his power. Indeed, if you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God. But putting Greenspan (or his successor) into the picture restores much of the classical vision of the macroeconomy. Instead of an invisible hand pushing the economy toward full employment in some unspecified long run, we have the visible hand of the Fed pushing us toward its estimate of the noninflationary unemployment rate over the course of two or three years. Unit Six The Return of Depression Economics — Paul Krugman To an adherent of the neoclassical synthesis like myself, then, the really disturbing thing about the world’s current problems is not so much the possibility that they will spiral into a new Great Depression, which still remains unlikely and indeed seems to have receded in the last few months. Instead, the problem is that for the first time since the 1930s, we cannot be sure that governments can or will