Saturday, June 30, 2012


It’s interesting to find out that “hydraulic Keynesianism” was once really hydraulic, in the form of a Phillips water machine.  I recommend that, if you are interested in this kind of modeling and don’t want to deal with real water and its tendency to squirt through loose valves, you can get the same effect through the use of STELLA, a software package that provides simple, intuitive modeling of dynamic systems.  I’ve played around with it and can say that it’s wonderful fun.  You could actually build an economics course around it—has anyone tried?

UPDATE: I guess the leaky valves are not a problem if, underneath, you have an effective liquidity trap....

1 comment:

kevin quinn said...

There you go again, Peter- carrying water for Keynes!