Phillips Curve Part III: Melding GEM Labor Pricing

The crucial contribution of generalized-exchange macroeconomics is its intuitive extension of rational price-mediated exchange from the marketplace to workplaces restricted by asymmetric employer-employee information. Early and New Keynesian theorists have never grasped that the primary missing element in their market-centric … 
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Phillips Curve Part 1: Brief History

This post begins a four-part series that illustrates the power of generalizing rational exchange from the marketplace to information-challenged workplaces by working through its implications for the specification and use of the Phillips curve. The PC has long been macro … 
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Lucas on Keynes Via De Vroey

I am on my annual get-away-from-Chicago-winter sojourn in San Miguel, Mexico. As suggested by the previous post, part of my poolside recreation has been rereading parts of Michel De Vroey’s A History of Macroeconomics from Keynes to Lucas and Beyond … 
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Non-Walrasian Equilibrium Theory

Blog readers know that the earliest version of the GEM Project’s generalized-exchange modeling played a seminal, albeit underappreciated, role in the brief period of active research on Efficiency-Wage Theory (EWT). My 1981 article and 1984 book introduced that literature to … 
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Missing Macro Tools

In A History of Macroeconomics (2016), Michel De Vroey blamed inadequate analytic tools for the failure of Keynes’ General Theory to explain mass involuntary unemployment: “Keynes could simply accomplish no more than what was possible given the state of economic … 
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Reckless New Keynesians

The GEM Project focuses on evidence-consistent rational wage rigidity and its role in macroeconomic analysis. That research has demonstrated that, in highly specialized economies, WR manifests itself in two ways: downward nominal wage rigidity and pure wage rent. DWR is … 
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Passing Out Nobels

Year-end is traditionally the time to reward superior performance. In that spirit, this post uses the lens provided by the GEM Project to honor theorists whose work greatly improves the capacity of macroeconomics to explain mass market failure and identify … 
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Keynes’ Rejection of Wage Rigidity

This post addresses a long-standing curiosity in macroeconomics that is especially relevant to the GEM Project. Why did Keynes reject a role for nominal wage rigidity (WR) in his explanation of involuntary job loss? From The General Theory (1936): “There … 
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Macro Time Separation

Early Keynesians’ dogged quest for policy relevancy was greatly abetted by their practicality. Whenever microfounded macro theory capable of providing useful advice was not available, they were not shy about using assumptions aligned with observable behavior to make existing models … 
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