xy

@xy, member from Sept. 25, 2023

Favourite quotes (21448)

“I had, to be sure, been drawn into economics when the General Theory was an exciting revelation for students hungry for explanation and remedy of the Great Depression. At the same time, I was uncomfortable with several aspects of Keynes’ theory, and I sought to improve what would now be called the microfoundations of his macroeconomic relations.”

James Tobin (1918–2002) American economist

"Price Flexibility and Output Stability: An Old Keynesian View" (1993)

“I shall argue that Keynesian macroeconomics neither asserts nor requires nominal wage and/or price rigidity. It does assert and require that markets not be instantaneously and continuously cleared by prices.”

James Tobin (1918–2002) American economist

"Price Flexibility and Output Stability: An Old Keynesian View" (1993)

“I suspect that many of the world's financial lords are somewhat embarrassed to tell Japan repeatedly at G-7 meetings and elsewhere to adopt a Keynesian solution. Within Europe, central banks and governments think Keynesian theories and policies are absolutely wrong. Despite the remarkable success of pragmatic policies in the United States, true believers in the Invisible Hand reject Keynesian diagnoses and prescriptions. Many observers of Japan have found it intellectually comforting to blame the slump on the plight of the banks, flooded with bad loans dated from the land and equity bubbles and their collapse. They hope that a governmentmanaged and -subsidized rectification of bank balance sheets will trigger overall economic recovery. I think this is a false hope. The bank problem is only a small part of the macroeconomic disaster. It has to be resolved, of course, but resolution that is no substitute for the needed fiscal and monetary stimuli.”

James Tobin (1918–2002) American economist

"Reflections on Japanese Political Economy" (1999)

“A long decade ago economic growth was the reigning fashion of political economy. It was simultaneously the hottest subject of economic theory and research, a slogan eagerly claimed by politicians of all stripes, and a serious objective of the policies of governments. The climate of opinion has changed dramatically. Disillusioned critics indict both economic science and economic policy for blind obeisance to aggregate material "progress," and for neglect of its costly side effects. Growth, it is charged, distorts national priorities, worsens the distribution of income, and irreparably damages the environment. Paul Erlich speaks for a multitude when he says, "We must acquire a life style which has as its goal maximum freedom and happiness for the individual, not a maximum Gross National Product."”

James Tobin (1918–2002) American economist

Nordhaus, William D., and James Tobin. " Is growth obsolete? http://www.nber.org/chapters/c7620.pdf." Economic Research: Retrospect and Prospect Vol 5: Economic Growth. Nber, 1972. 1-80. <br class="br">1970s and later

“Economics has always flourished and acquired energy from controversies generated by practical policy questions of the day. That was true in the times of Smith, and Ricardo, and Keynes, and it is true today. These periods of division and revolution and counterrevolution are generally followed by periods of synthesis and consolidation from which the science emerges stronger. i am optimistic that this will happen again, and that the best of the insights of the new clasicals will be absorbed in a mainstream, in which the essential insights of Keynesian economists also survive.”

James Tobin (1918–2002) American economist

James Tobin, in Conversations with Economists (1983) by Arjo Klamer
1970s and later

“The central message is still that, as Keynes argued, fiscal policy is the answer to liquidity traps, financial or political. The arguments against fiscal policy in Japan, so far as I understand them are intellectually fallacious; they would receive failing grades in an undergraduate macro exam.”

James Tobin (1918–2002) American economist

"Reflections on Japanese Political Economy" (1999)

“With the publication of J. M. Keynes’s General Theory in 1936 and the mathematical formalizations of his theory by J. R. Hicks (1937) and others, the language of macro-economic theory became systems of simultaneous equations. These are general equilibrium systems of interdependence in the sense that the relationships describe an entire national economy, not just a particular industry or sector. The systems are usually not completely closed; they depend on exogenous parameters including instruments controlled by policy-makers. Seeking definite relationships of economic outcomes to policies and other exogenous variables, qualitative and quantitative, these models sacrifice detail and generality, limiting the number of variables and equations by aggregations over agents, commodities, assets, and time.”

James Tobin (1918–2002) American economist

Source: "Money and Finance in the Macro-Economic Process" (1982), p. 12

“In economic surveys of households, many variables have the following characteristics: The variable has a lower, or upper, limit and takes on the limiting value for a substantial number of respondents. For the remaining respondents, the variable takes on a For the remaining respondents, the variable takes on a wide range of values above, or below, the limit.”

James Tobin (1918–2002) American economist

Tobin, James. " Estimation of relationships for limited dependent variables http://cowles.econ.yale.edu/P/cp/p01a/p0117.pdf." Econometrica: journal of the Econometric Society (1958): 24-36. <br class="br">1950s-60s

“I probably always say the same things; I hope people don't remember. One of the same things I say is that Japanese macroeconomic policy is perversely and inexcusably incompetent, and I surely would say that again. It's true-as Paul Krugman, a fellow participant in this program, has been saying and as I have said here in previous years-that Japan has reinvented the Keynesian liquidity trap. It can now reappear in classrooms where it had been long ignored or at best barely mentioned as a curiosum of the Great Depression.”

James Tobin (1918–2002) American economist

"Reflections on Japanese Political Economy" (1999)

“Monetarism—both of the older Friedman version stressing adherence to money stock targets and of the newer rational expectations variety—has been badly discredited. The stage has been set for recovery in the popularity of Keynesian diagnoses and remedies. I do not mean to imply, of course, that there is some Keynesian truth, vintage 1936 or 1961, to which economists and policymakers will or should now return, ignoring the lessons of economic events and of developments in economics itself over these last turbulent fifteen years. I do mean that in the new intellectual synthesis which I hope and expect will emerge to replace the divisive controversies and chaotic debates on macroeconomic policies, Keynesian ideas will have a prominent place.”

James Tobin (1918–2002) American economist

James Tobin, "Keynes' Policies in Theory and Practice", Challenge (1983).
1970s and later

“Ball, Mankiw, Romer and others style themselves as New Keynesians. Their program is to develop improved microeconomic foundations for imperfectly flexible prices. In the process, they hope to illuminate the paradox that individually rational or near-rational behavior can result in significant collective market failures. These are certainly laudable objectives. In the end, I suspect, the program will not change the essential substance of Keynesian macroeconomics. But it will make Keynes more palatable to theorists.”

James Tobin (1918–2002) American economist

"Price Flexibility and Output Stability: An Old Keynesian View" (1993)

“Keynesian economics at a minimum provides a license for welfare state measures and other government efforts towards redistribution of wealth. The license is the faith that macroeconomic stabilization and prosperity are compatible with a wide range of social policies, that modern capitalism and democracy are robust enough to prosper and progress while being humane and equitable. That faith conflicts with the visions of extreme Right and Left, which agree that extremes of wealth and poverty, of security and insecurity, are indispensable to the functioning of capitalism. Keynesian policies helped to confound those dismal prophecies in the past; I think they will do so again.”

James Tobin (1918–2002) American economist

James Tobin, "Keynes' Policies in Theory and Practice", Challenge (1983).
1970s and later

“There is no reason to think that the impact [of monetary policy] will be captured in any single [variable]…, whether it is a monetary stock or a market interest rate.”

James Tobin (1918–2002) American economist

Source: "A general equilibrium approach to monetary theory" (1969), p. 29 as cited in: Andrés, Javier, J. David López-Salido, and Edward Nelson. " Tobin's imperfect asset substitution in optimizing general equilibrium http://research.stlouisfed.org/wp/2004/2004-003.pdf." Journal of Money, Credit and Banking (2004): 665-690.

“The rate of investment – the speed at which investors wish to increase the capital stock – should be related, if to anything, to q, the value of capital relative to its replacement cost.”

James Tobin (1918–2002) American economist

Source: "A general equilibrium approach to monetary theory" (1969), p. 21 as cited in: Sılvio Rendon, "Non-Tobin’s q in Tests for Financial Constraints," 2009

“The historic terrain of macro-economic theory is the explanation of the levels and fluctuations of overall economic activity. Macro-economists have been especially interested in the effects of alternative fiscal, financial, and monetary policies.”

James Tobin (1918–2002) American economist

Source: "Money and Finance in the Macro-Economic Process" (1982), p. 12

“Keynesian economics was, in the context of those times, essentially conservative.”

James Tobin (1918–2002) American economist

James Tobin, "A Revolution Remembered", Challenge (1988).
1970s and later
Context: Keynesian economics was, in the context of those times, essentially conservative. The message was that capitalism was not doomed; its major failing, chronic large-scale unemployment, could be remedied fairly easily, by intelligent use of the fiscal and monetary instruments governments already had at their disposal. This message was not welcome news to Marxists committed to the view that the system was no longer structurally capable of prosperity and progress.

“Markowitz's main interest is prescription of rules of rational behaviour for investors;”

James Tobin (1918–2002) American economist

Tobin, James. " Liquidity preference as behavior towards risk http://web.uconn.edu/ahking/Tobin58.pdf." The review of economic studies (1958): 65-86. <br class="br">1950s-60s <br class="br">Context: A forthcoming book by Harry Markowitz, Techniques of Portfolio Selection, will treat the general problem of finding dominant sets and computing the corresponding opportunity locus, for sets of securities all of which involve risk. Markowitz's main interest is prescription of rules of rational behaviour for investors; the main concern of this paper is the implications for economic theory, mainly comparative statics, that can be derived from assuming that investors do in fact follow such rules.

“The miserable failures of capitalist economies in the Great Depression were root causes of worldwide social and political disasters.”

James Tobin (1918–2002) American economist

"James Tobin - Biographical" (1981)
Context: For me, growing up in the 1930s, the two motivations powerfully reinforced each other. The miserable failures of capitalist economies in the Great Depression were root causes of worldwide social and political disasters. The crisis triggered a fertile period of scientific ferment and revolution in economic theory.

“Consult not your fears but your hopes and your dreams. Think not about your frustrations, but about your unfulfilled potential. Concern yourself not with what you tried and failed in, but with what it is still possible for you to do.”

Pope John XXIII (1881–1963) 261st Pope of the Catholic Church

“God desires us to follow the examples of the saints by absorbing the vital sap of their virtues and turning it into our own life-blood, adapting it to our own individual capacities and particular circumstances.”

Pope John XXIII (1881–1963) 261st Pope of the Catholic Church

Journal of a Soul (1903)
Context: From the saints I must take the substance, not the accidents of their virtues. I am not St. Aloysius, nor must I seek holiness in his particular way, but according to the requirements of my own nature, my own character and the different conditions of my life. I must not be the dry, bloodless reproduction of a model, however perfect. God desires us to follow the examples of the saints by absorbing the vital sap of their virtues and turning it into our own life-blood, adapting it to our own individual capacities and particular circumstances. If St. Aloysius had been as I am, he would have become holy in a different way.