A reason to reread Olivier Blanchard and Stanley Fischer’s Lectures in Macroeconomics (1989) is an early statement of what New Keynesians (NK) hoped to accomplish during the 30-year macro methodology war. We all know the short answer. NK economists were …
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Second-Guessing Bernanke in the 2008-09 Crisis
Gretchen Morgenson’s (2015) New York Times column, “At the Fed in 2009, Rolling the Dice in a Crisis”, is a noteworthy take on the 2009 transcripts of Fed meetings during the most perilous economic crisis since the 1930s depression. She …
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Bob Hall’s Choice
Last week’s blog considered, from the perspective of the GEM Project, Kartik Athreya’s (2013) four rules governing what makes a model acceptable to mainstream macroeconomists. This week’s installment illustrates the troubling choices those rules impose on modern theorists.
Robert Hall, a …
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The Biggest Idea in Macroeconomics
Kartik Athreya is an economist at the Richmond Fed. He must be an interesting colleague. His recent book, Big Ideas in Macroeconomics (2013), identifies and elaborates upon four rules of engagement in modern macroeconomics. Those rules matter, defining what makes …
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Generalized Exchange Theory
This blog briefly summarizes the GEM Project. I feel good – downright cheerful – about the purpose and prospects for the endeavor. It is a pleasure to do coherent macroeconomics with powerful wage rigidities at your beck and call. Macro …
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At Last, A Modern Theory of Production
This is the third and final installment of the “At Last” blogs. Next week will very briefly summarize generalized-exchange macroeconomics, followed by an elaboration on the Project’s biggest idea. The six blogs summarizing the GEM theory constitute a small reference …
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At Last, A Modern Theory of Labor Supply
The General Theory reorients fundamental macro causation. Nominal demand disturbances inducing same-direction changes in employment implies the scrapping of Keynes’s Second Classical Postulate. Any plausible model of the 1930s depression must break the beautiful W=VMP=MRS analytic strangle-hold imposed by the …
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At Last, A Modern Theory of Wages
Consider two facts about textbook wage theory. First, it is little changed from its original construction by the great 19th century marginalists. Second, for at least 100 years, mainstream thinking has been badly out of step with the actual behavior …
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Modeling Extreme Instability
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