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James Tobin Research Paper

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James Tobin Research Paper
JAMES TOBIN AND MODERN MONETARY THEORY

by Robert W. Dimand

CHOPE Working Paper No. 2014-05
February 2014

JAMES TOBIN AND MODERN MONETARY THEORY Robert W. Dimand Department of Economics Brock University 500 Glenridge Avenue St. Catharines, Ontario L2S 3A1 Canada Telephone: 1‐905‐688‐5550 x 3125 Fax: 1‐905‐688‐6388 …show more content…
Coming to economics and Keynes in 1936, Tobin regarded high levels of unemployment (25% unemployment in the US in the worst of the Depression in 1932‐33 and back up to 17% during the recession of 1937, 22% unemployment in Britain before Britain left the gold standard in 1931), lasting for years, as self‐evidently not the result of voluntary consumption of leisure or investment in search, nor as the result of failure to know what had happened to the price level. Involuntary unemployment, like any form of involuntary behavior, has proven elusive to define or measure (see DeVroey 2004).
Tobin did not attempt to do so, taking an attitude to whether there was involuntary unemployment in the 1930s that brings to mind Justice Potter Stewart, who, when challenged to define pornography, replied, “I know it when I see it.”16 Nor did Tobin care whether protracted high unemployment in the
1930s, whether involuntary (however defined) or not, was an equilibrium phenomenon or merely a
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