Word: economists
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Dates: during 1980-1989
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Associate Professor of Economics Lawrence B. Lindsey, a supply-side economist who has been a vocal proponent of lower taxes, will become the associate director of the office of policy development, an executive branch agency which advises the president on the economy and other domestic issues...
Members of the rational-expectations school, which holds that people keep a sharp eye on government policies and then act accordingly, were also caught short by inflation's fall. "If you had listened to me eight years ago," says University of Chicago economist Robert Lucas, "I would have predicted an inflation rate of 25% with these deficits...
...years ago, there weren't that many people we could borrow money from," notes Harvard's Jeffrey Sachs, a leading international economist. "We were reluctant to run deficits out of fear of creating sky-high inflation. Now there is a global bank-teller window that is open 24 hours a day, and we've been one of the most frequent customers." Sachs warns, however, that the bender cannot last. "We're faking it," he says. "Our living standard isn't being maintained by higher productivity or wages. It's maintained by foreign capital...
That concern is echoed by resurgent Keynesian economists, who are trying to adapt their mostly liberal views to current conditions. Virtually counted out when inflation surged along with unemployment in the 1970s, the Keynesians now point out that Reagan borrowed from their philosophy in propelling his economic boom with deficit spending, which Keynesians have long advocated as a cure for slumps. "Keynesianism was vindicated by these last eight years," says Princeton economist Alan Blinder, a leading exponent of the school of thought. Blinder insists, however, that the deficits have got far out of hand...
...Many economists have been staring through a veil of mathematics that can further distort what they see. "Economics research has become more a game of chess than a search for understanding reality," says economist David Colander of Middlebury College in Vermont. Colander and Arjo Klamer, a visiting professor at the University of Iowa, surveyed more than 200 graduate students at six top economics departments. When the students were asked what it took to advance rapidly in the economics profession, an astonishing 68% said "a thorough knowledge of the economy" was unimportant. At the same time, 57% picked "excellence in mathematics...