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What does Say's Law hold and what are the implications in terms of economic policy?

What does Say's Law hold and what are the implications in terms of economic policy?. Say's Law holds production precedes consumption The main policy recommendation is non-intervention.

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What does Say's Law hold and what are the implications in terms of economic policy?

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  1. What does Say's Law hold and what are the implications in terms of economic policy? • Say's Law holds production precedes consumption • The main policy recommendation is non-intervention

  2. What arguments, according to von Mises, does Keynes provide to refute this law? What arguments, according to your opinion, does Keynes provide to wipe out more than 100 years of classical economics? • According to Von Mises Keynes ignores Say’s law (he turned it upside down) • Keynes's main argument is that according to the classical laissez faire theories the Great Depression should not have happened, but it did • Was it really so?

  3. Explain the following sentence in the context of Say's Law: "The New Deal-style plans (as in the USA during the 1930s) allow filling the hole left by the fall in private investment and private consumption during a period of recession." Think critically, as an economist would do, pondering not only the immediate consequences but also the probable long-run outcome

  4. The statement argues that crises occur when private consumption falls • This gap has to be filled in • But what about thinking beyond “stage one”? • Perhaps our premise was wrong? Perhaps crisis do not occur because of a fall in private consumption • What then? • Foresight errors by businessmen? Too greedy? • Change of taste by consumers? • Foreign competition? • The system is wrong? • Too much previous intervention? (monetary/fiscal policy)

  5. Draw a parallel between the crisis of the 1930s and the current one, between the dominant paradigm at that time and today, and between the different explanations that have been used in those years and today. Explain. • Similarities: • High unemployment • Important contagion component • Past record of government intervention • Same paradigm (economics/politics) • Dissimilarities: • Active role of centrals banks now versus passive role before (?) • More dynamic situation today (role of technologies and Internet)

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