James Buchanan and Richard Wagner begin their book Democracy in Deficit by explaining that prior to the absorption of Keynesian economics, the conventional wisdom of Adam Smith prevailed. Adam Smith had observed that: “What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.” This…
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Bernanke urges for an increase in the debt ceiling, demonstrating the wisdom of James Buchanan and Richard Wagner. In Democracy in Deficit, Chapter 8, the authors set out to model Keynesian-oriented fiscal policy with the “the plausible hypothesis that monetary authorities are, like elected politicians, subjected to both direct and indirect political pressures, and…
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