Behavioral
Behavioral Economics
In his 2006 speech, "The Missing Motivation in Macroeconomics," George Akerlof (Katie), a Nobel Prize-winning economist, challenges some ideas about macroeconomics that were established by the well-respected John Maynard Keynes.
The five neutralities discussed by Akerlof are:
1. The independence of consumption and current income (Katie)
2. The independence of investment and finance decisions (Eli)
3. Inflation stability only at the natural rate of unemployment (Stacie)
4. The ineffectiveness of macro-stabilization policy with rational expectations (LUDA, this is the only one left, it's yours)
5. Ricardian equivalence, which Professor McPhail does not agree with, so we're not going to discuss.
The Keynesian Approach (Sharyn)
Akerlof addresses the neutrality of consumption and current income. Keynes argues that an individual will make economic decisions based on current income. However, Akerlof's research suggests that an individual will consider other things occurring in their lives, also.
