krugman.blogs.nytimes.com - 2/23/2009
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One of the key insights in Keynes's General Theory - actually, THE key insight - was that the loanable funds theory of the interest rate was incomplete. Loanable funds says that the interest rate is determined by the supply of and demand for saving; Keynes pointed out that the supply of saving ...
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And You Thought IS-LM Analysis Was Dead
The Austrian Economists —
... The old Neoclassical Synthesis is resurrected once again, over at Krugman's blog. (Notice that his discussion of the budget deficit's impact on interest rates assumes the LM curve is nearly horizontal below full employment.) ...
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