Hydraulics

Hydraulics

Hydraulics is a topic in applied science and engineering dealing with the mechanical properties of liquids. Fluid mechanics provides the theoretical foundation for hydraulics, which focuses on the engineering uses of fluid properties. In fluid power, hydraulics is used for the generation, control,...

 is the science and engineering of the mechanical properties of liquids. Macroeconomics

Macroeconomics

Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...

 is the study of the performance and structure of an entire economy.

Hydraulic Macroeconomics is, essentially, a study of the economy that treats money as a form of liquid that circulates through the economic plumbing.

For example, Arnold Kling

Arnold Kling

Arnold Kling is a founder and co-editor of , an economics blog, along with Bryan Caplan and David Henderson.Kling graduated from Swarthmore College in 1975 and received a Ph.D. in economics from Massachusetts Institute of Technology. He worked as an economist in the Federal Reserve System from 1980...

 describes Hydraulic Macroeconomics thusly:

Mainstream macroeconomics is "hydraulic." There is something called "aggregate demand" which you adjust by pumping in fiscal and monetary expansion.

The term "Hydraulic Macroeconomics" is generally associated with Keynesian economic models.

William Phillips

William Phillips (economist)

Alban William Housego "A. W." "Bill" Phillips, MBE was an influential New Zealand economist who spent most of his academic career at the London School of Economics . His best-known contribution to economics is the Phillips curve, which he first described in 1958...

, a famous economist and creator of the Phillips Curve, invented the MONIAC

MONIAC Computer

The MONIAC also known as the Phillips Hydraulic Computer and the Financephalograph, was created in 1949 by the New Zealand economist Bill Phillips to model the national economic processes of the United Kingdom, while Phillips was a student at the London School of Economics , The MONIAC was an...

 a hydraulic computer which simulated the British economy. This is the inspiration for the term. The term was invented by Alan Coddington.