As noted by Alan Greenspan in 2008, one key flaw in standard models is that they treat animal spirits as a simple ‘add factor’, rather than as a structural one. This paper evaluates the extent to which two recent approaches placing the emphasis on animal spirits – namely Farmer’s ‘Neo-Paleo-Keynesian’ (NPK) project and Akerlof and Shiller’s behavioural approach – manage to overcome this flaw. By following the powerful religious metaphor introduced by Farmer, according to which general equilibrium theory underlying standard models should be regarded as a ‘church’, this paper stresses two points. First, animal spirits turn out to be devilish features that are inconsistent with the Church’s commandments. Second, by trying to reconcile them with the Church, these two approaches are unable to truly reform it as required by Greenspan; rather, they appear to be heretical stances that are forced to violate some fundamental dogmas of the Church.

On two recent attempts to introduce animal spirits in macroeconomics. Heresy or enlightened church reform?

Teodoro TOGATI
2021-01-01

Abstract

As noted by Alan Greenspan in 2008, one key flaw in standard models is that they treat animal spirits as a simple ‘add factor’, rather than as a structural one. This paper evaluates the extent to which two recent approaches placing the emphasis on animal spirits – namely Farmer’s ‘Neo-Paleo-Keynesian’ (NPK) project and Akerlof and Shiller’s behavioural approach – manage to overcome this flaw. By following the powerful religious metaphor introduced by Farmer, according to which general equilibrium theory underlying standard models should be regarded as a ‘church’, this paper stresses two points. First, animal spirits turn out to be devilish features that are inconsistent with the Church’s commandments. Second, by trying to reconcile them with the Church, these two approaches are unable to truly reform it as required by Greenspan; rather, they appear to be heretical stances that are forced to violate some fundamental dogmas of the Church.
2021
74
296
51
73
animal spirits, general equilibrium, research programmes, Keynesian economics, macroeconomic models
Teodoro TOGATI
File in questo prodotto:
File Dimensione Formato  
PSLQR.pdf

Accesso riservato

Tipo di file: PREPRINT (PRIMA BOZZA)
Dimensione 382.38 kB
Formato Adobe PDF
382.38 kB Adobe PDF   Visualizza/Apri   Richiedi una copia
letter_togati PSL.pdf

Accesso riservato

Tipo di file: MATERIALE NON BIBLIOGRAFICO
Dimensione 118.76 kB
Formato Adobe PDF
118.76 kB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2318/1761360
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? 0
social impact