Outlook Newsletter

Each month, CoBank's Outlook newsletter provides valuable data on interest rates and economic indicators, along with commentary from leading economics and public policy experts around the world. Click the link below to download the current issue of Outlook.

August 2010

Keynes, Hayek and the Great Stimulus Debate

The $862 billion federal stimulus package enacted last year marked a triumph for the Keynesian school of economics - those who believe that, at times of economic contraction, government can and should use fiscal policy and public spending to replace shrinking demand in the private sector.

Today, with the U.S. jobless rate still near 10 percent and GDP growing anemically, debate continues to rage about the wisdom and impact of the 2009 stimulus plan and the debts incurred to implement it. Opposing the Keynesian view are disciples of another dead economist, Friedrich Hayek, a contemporary of Keynes and frequent intellectual sparring partner. Hayek, who believed government intervention tends to distort markets, is credited with developing theories that highlighted the fundamental flaws behind the centrally planned economies of socialist and communist countries. Though he is far less well known than Keynes, the Austrian-born Hayek was nonetheless awarded a Nobel Prize in economics in 1974. He died in 1992.

Among Hayek's supporters is Russ Roberts, an economics professor at George Mason University and research fellow at Stanford University's Hoover Institution. OUTLOOK recently spoke with Roberts about Hayek's theories and their implications for public policy in the current political and economic environment.

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