Has Quebec’s strongStandard of Livingstrong Been Catching Up - csls.ca.pdfVIP

Has Quebec’s Standard of Living Been Catching Up? Pierre Fortin Introduction David Slater has always been a great inspiration for me. His concern has been that economists should strive to connect deep theoretical thinking with practical affairs and public policy. This is an old view of the role of the economist in society, one that Maynard Keynes, in particular, carried to its highest accomplishment in the twentieth century. It is an old view not in the sense of being passé, but of being a firmly established and ever relevant view of what our profession is about. I get comfort in seeing the best and brightest among our colleagues still advise governments, work for governments and even engage in politics. In my generation, Olivier Blanchard, Willem Buiter, Stan Fischer, Pedro Malan, John McCallum and Larry Summers are good examples to watch. Speaking of Keynes, David remained inspiringly Keynesian through the 1970s and 1980s, when conservative ideology came to dominate thinking in economic theory and policy and Keynes was repeatedly pronounced dead. I am referring to Friedman’s monetarism, to Lucas’ equilibrium business cycles based on price misperceptions and to Prescott’s real business cycles based on productivity shocks. Conservative macroeconomics eventually petered out both on empirical grounds and against the counterattacks of New Keynesians such as Akerlof, Blanchard, Grandmont and Stiglitz. As Paul Krugman (1994, p. 197) nicely put it, Keynes has proved to be the “Energizer Bunny” of Has Quebec’s Standard of Living Been Catching Up? 381 economics. Greenspan’s brand of success at the helm of the U.S. Federal Reserve owes almost everything to Keynes, and almost nothing to the conservative icons of those two dark decades. David had it right all along. His common sense helped many of us weather the passing storm. David has also