{"id":21084,"date":"2016-06-18T15:52:04","date_gmt":"2016-06-18T20:52:04","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21084"},"modified":"2016-06-18T15:52:04","modified_gmt":"2016-06-18T20:52:04","slug":"rationalizing-rational","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21084","title":{"rendered":"Rationalizing ‘Rational’"},"content":{"rendered":"
\n
\n

RATIONALIZING \u2018RATIONAL\u2019<\/a><\/h3>\n<\/div>\n<\/header>\n
\n
\n
\n
\n

Walter W. Heller was said to have been an \u201ceducator of Presidents.\u201d As an economist and Presidential advisor in the inner circles of DC, Heller worked with more candidates and officeholders than perhaps any other man. As he himself described, his influence went all the way back to Adlai Stevenson and kept on through Kennedy, Johnson, Carter, and Mondale. To his mind,\u00a0he takes credit<\/a>\u00a0for turning Presidents into thorough Keynesians starting with JFK in January 1963 and the tax cut \u201cstimulus\u201d that Heller claims was \u201cborn on my desk.\u201d<\/p>\n

As an economist and advisor, Heller seems to have spent a lot of time about the 1960\u2019s and almost none describing the 1970\u2019s. Perhaps his greatest contribution to that decade was a quote attributed to him describing economics. \u201cAn economist is a man who, when he finds something works in practice, wonders if it works in theory.\u201d<\/p>\n

Among the most pernicious of these theories to have been backward applied in exactly that manner is \u201crational\u201d expectations theory. This was developed in the 1980\u2019s to try to explain the disaster of the 1970\u2019s in terms that would save econometrics. Thus, it is applied in great detail and mathematics to \u201cinflation\u201d and is often discussed only in that context. Among the\u00a0most influential<\/a>\u00a0to have used rational expectations theory was John Taylor as the basis for the Taylor \u201crule.\u201d<\/p>\n

In a 2007 speech, then-Federal Reserve Chairman Ben Bernanke described the updated expectations framework as it at that time related to inflation and gradualism in\u00a0monetary policy<\/a>\u00a0(into the onrushing storm).<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

RATIONALIZING \u2018RATIONAL\u2019 Walter W. Heller was said to have been an \u201ceducator of Presidents.\u201d As an economist and Presidential advisor in the inner circles of DC, Heller worked with more candidates and officeholders than perhaps any other man. As he himself described, his influence went all the way back to Adlai Stevenson and kept on […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[123,7380,925,426,467,14044,14045,14041,14043,4088,14042,865],"class_list":["post-21084","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banking","tag-cobden-centre","tag-econometrics","tag-inflation","tag-keynesian-economics","tag-practice","tag-rational-expectations-theory","tag-rationalization","tag-tax-cut-stimulus","tag-theory","tag-walter-heller","tag-washington"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21084","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21084"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21084\/revisions"}],"predecessor-version":[{"id":21085,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21084\/revisions\/21085"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21084"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21084"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21084"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}