<p>You very often see Krugman an other economists imply that corporations holding cash is a bad thing or affects demand. </p>

<p><a href="http://krugman.blogs.nytimes.com/2011/07/02/cash-is-not-the-problem/?_r=0" rel="nofollow">http://krugman.blogs.nytimes.com/2011/07/02/cash-is-not-the-problem/?_r=0</a></p>

<p>However, you have to remember that Krugman is just stating his personal opinion. He does sometimes say things that contradict academic Keynesianism. </p>

<p>The fact that corporations hoard less cash during recessions doesn't necessarily contradict Keynesianism or New Keynesianism, but it does require these theories to explain why corporations behave this way (which the theorists have not attempted).</p>

CC BY-SA 3.0
2016-02-15T15:55:04.120Z
-1 for the *ad hominem* paragraph, the point (last paragraph) can be driven home without it
FooBar
CC BY-SA 3.0
2016-02-17T00:01:38.450Z
Then answer is "no" as stated in the last paragraph.
D J Sims
CC BY-SA 3.0
2016-02-15T00:39:08.140Z
2016-02-15T19:09:08.633Z
2016-02-15T19:09:08.633Z
D J Sims
<p><a href="https://i.sstatic.net/JkS3m.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/JkS3m.jpg" alt="Cash"></a></p>

<p>It seems cash reserve is procyclical. Also anyone have the financial cash reserve data?</p>

CC BY-SA 3.0
2016-01-05T13:34:19.840Z
Could you explain how this contradicts Keynesianism (IE. provide the relevant equations)? Money supply (M2) goes down during recessions due to loans going bad. This is not something that is even part of the classic Keynsian theory AFAIRC.
Dole
<new-keynesian-economics>
Doesnt the fact that cash reserves go down in recessions contradict Keynesianism?
D J Sims
# Doesnt the fact that cash reserves go down in recessions contradict Keynesianism?

(Asked by: username_0 on 2016-01-05)

[![Cash](https://i.sstatic.net/JkS3m.jpg)](https://i.sstatic.net/JkS3m.jpg)

It seems cash reserve is procyclical. Also anyone have the financial cash reserve data?

**Tags:** new-keynesian-economics

> **Comments:**
> **username_1**: Could you explain how this contradicts Keynesianism (IE. provide the relevant equations)? Money supply (M2) goes down during recessions due to loans going bad. This is not something that is even part of the classic Keynsian theory AFAIRC.  

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## 1 answers

### Answer by username_0 on 2016-02-15. Score: -1

You very often see Krugman an other economists imply that corporations holding cash is a bad thing or affects demand.

<http://krugman.blogs.nytimes.com/2011/07/02/cash-is-not-the-problem/?_r=0>

However, you have to remember that Krugman is just stating his personal opinion. He does sometimes say things that contradict academic Keynesianism.

The fact that corporations hoard less cash during recessions doesn't necessarily contradict Keynesianism or New Keynesianism, but it does require these theories to explain why corporations behave this way (which the theorists have not attempted).

> **Comments:**
> **username_2**: -1 for the *ad hominem* paragraph, the point (last paragraph) can be driven home without it  
> **username_0**: Then answer is "no" as stated in the last paragraph.  

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