Home2024 (Page 15)

A central doctrine of the Keynesian system is the “liquidity trap” in which consumers hold money in anticipation of higher interest rates. The act of holding money allegedly promotes “underconsumption,” continuing the economic downturn. This doctrine, however, cannot withstand scrutiny.

Buchanan and Tullock‘s The Calculus of Consent influentially applies economic ideas to politics, focusing on methodological individual. However, there are a few pitfalls about which readers should be aware.