tag:blogger.com,1999:blog-2546602206734889307.post6407678467350026112..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: The Return of Schools of Thought MacroMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2546602206734889307.post-49797063328228779682012-02-06T00:09:52.407+00:002012-02-06T00:09:52.407+00:00Your views seem to reflect two standard biases tha...Your views seem to reflect two standard biases that mainstream economists have when presented with the crisis as evidence against their theory:<br /><br />(a) The crisis was some sort of unpredictable exogenous shock, unrelated to the previous boom.<br /><br />(b)It's impossible to predict these things.<br /><br />Of course, Steve Keen's models predicted the crisis pretty well - we're not talking dates, we're talking about the unsustainable build up of private debt that your models ignore. As you say:<br /><br />'I mean for pete's sake, it's quite hard to predit a credit crisis if your model of the economy doesn't have a credit market.'<br /><br />Except you seem to be using this as a defence?Unlearningeconhttps://www.blogger.com/profile/13687413107325575532noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-19046399348283931902012-02-02T23:04:08.344+00:002012-02-02T23:04:08.344+00:00Newton's laws of motion do predict that ships ...Newton's laws of motion do predict that ships would capsize in rough seas.Newtoniannoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41270246959522082182012-02-02T12:59:30.849+00:002012-02-02T12:59:30.849+00:00I really hate it when commenters mention some sort...I really hate it when commenters mention some sort of 'official macro' as if economic theory were handed down from god on stone tablets. I hate it even more when people say they didn't predict the crisis.<br /><br />I mean for pete's sake, it's quite hard to predit a credit crisis if your model of the economy doesn't have a credit market. Stop criticising models that weren't designed for situations like this. It's like criticising newton's laws of motion by saying that they didn't predict that ships would capsize in rough seas.<br /><br />And also, this 'crisis'. It wasn't an event. It was lots of events, inter alia: US housing decline june 2007, money market freeze august 2007, northern rock bankruptcy september 2007, bear stearns march 2008, lehman brothers sept 2008, collapse in international trade jan 2009, eurocrisis may 2010 and so on and so forth.Charles Barryhttps://www.blogger.com/profile/03019253586123281436noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-661810761020679462012-01-30T00:00:12.800+00:002012-01-30T00:00:12.800+00:00You might also enjoy reading Wyyne Godley, "W...You might also enjoy reading Wyyne Godley, "<a href="w.guardian.co.uk/business/2005/aug/28/politics.comment" rel="nofollow">Why Gordon's Golden Rule is now history</a>" August 2005, where he predicts the impending crisis.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-35232898402194648472012-01-29T23:38:32.103+00:002012-01-29T23:38:32.103+00:00Bingo. It's the determined IGNORING of this c...Bingo. It's the determined IGNORING of this critique (a fairly obvious one, in truth) is one reason that I think the claim simon makes - that he is "against ideology clouding economics" - is self-deluding.<br /><br />If representative agent methods didn't tend to one broad general tendency - that, just as in lots of micro, individual markets (including markets for intertemporal capital allocation) are welfare-maximising and so governments should butt out - this critique would not have been ignored, any more than Lucas' (very effective) critique of Old Keynesianism.derrida deriderhttps://www.blogger.com/profile/01188777386180390172noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-88955157352621044452012-01-29T12:52:19.263+00:002012-01-29T12:52:19.263+00:00The biggest 'rabble rouser' of all beingth...The biggest 'rabble rouser' of all beingthe crisis that your models are unable to explain.Unlearningeconhttps://www.blogger.com/profile/13687413107325575532noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-33748387784292089562012-01-29T03:46:35.877+00:002012-01-29T03:46:35.877+00:00I just read this paper; thanks for the pointer! I...I just read this paper; thanks for the pointer! It appears to point to a basic missing ingredient in DSGE -- the existence of a financial sector capable of generating massive fraud via regulatory arbitrage.Unknownhttps://www.blogger.com/profile/18423799350044766780noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-46400079122528007742012-01-28T20:52:13.626+00:002012-01-28T20:52:13.626+00:00Funny how Steve Williamson dismisses as "rabb...Funny how Steve Williamson dismisses as "rabble rousers" people who did much better than his establishment gang and forecasting and analyzing what has happened in the last few years. Not surprising at all how this crowd grips ever more tightly to control of Official Macro, including denying the existence of schools of thought as something that concerns only fringey "rabble rousers." What a pathetic joke.Barkley Rosserhttps://www.blogger.com/profile/13114257724762074636noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-43867010487747607032012-01-28T19:57:48.560+00:002012-01-28T19:57:48.560+00:00Jamie Galbraith wrote a paper some time ago in res...Jamie Galbraith wrote a paper some time ago in response to Krugman's admission that some heterodox economists got the developing crisis right (prediction and explanation) while the mainstream economists missed it, cannot explain it, and have not produced policy that will fix the damage. A number or heterodox economists predicted it, explained it, and offered policy prescriptions based on the macro theory. <br /><br />The title of Galbraith paper was "Who Are These Economists, Anyway?" He mentions five: 1. Marxians as habitual Cassandras, 2. Dean Baker (Post Keynesian), 3. Wynne Godley (Post Keynesian), 4. Minskyians (who are also Post Keynesians), and 5. Galbraithians-Instititutionalists (JKG cites William K. Black of UMKC, Post Keynesian-MMT). He could also have mentioned Steve Keen as a Post Keynesian that emphases Minsky, as well as L. Randall Wray and Warren Mosler of Modern Monetary Theory (MMT), which is an outgrowth of Post Keynesianism, especially Lerner, Minksy, and Godley. <br /><br />Other than the Marxists, these economists are quite close to each other on most matters and significantly in agree over their areas of disagreement with New Classicalism and New Keynesianism. There is quite a large body of literature on this that goes back decades and has exploded recently.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-73220306582785669542012-01-28T16:15:29.834+00:002012-01-28T16:15:29.834+00:00"I’ve encountered a much larger range of econ..."I’ve encountered a much larger range of economics blogs in the last week or two (you can guess why), and it does feel like going back in time."<br /><br />I think the important thing to recognize is that the blogs (not mine, of course) do not reflect what macroeconomists actually do. In modern macro - published research, work presented at conferences and seminars - there are no schools of thought, in the methodological sense. There are however, many competing ideas floating around about how the world works, but it is hard to compartmentalize those ideas into distinct schools of thought. The financial crisis has brought back some rabble-rousers who exist on the fringe of the profession, but that is not an academic movement. Far from it.<br /><br />Steve WilliamsonStephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-61104406124919389542012-01-28T14:48:28.028+00:002012-01-28T14:48:28.028+00:00This is a terrific post and I'm going to assig...This is a terrific post and I'm going to assign it to my macro students. However, despite the reasonable tone, this viewpoint remains too restrictive. Economics is not just neoclassical economics, and to advocate a consensus that privileges neoclassical theory will exclude other valid points of view, from traditional schools like neo-Marxists or neo-Ricardians, post Keynesians, Austrians, or complexity theorists. We don't need to recreate the intellectual monoculture that failed to explain the crisis (even ex post!). Students should see alternatives, and be challenged to think for themselves.tom mhttps://www.blogger.com/profile/06218456457883749242noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-30166961472945615012012-01-28T12:39:15.360+00:002012-01-28T12:39:15.360+00:00I don't think the schools of thought ever real...I don't think the schools of thought ever really disappeared. There have always been economists working in the "freshwater" tradition of market-clearing models. Monetarists begat the New Classicals, who gave us RBC theory etc. Keynesians have obviously been influenced by these schools of thought, and today Friedman would have more in common with New Keynesians than with New Classicals.<br /><br />As far as I can see, the New Neoclassical Synthesis never really caught on; it is really synonymous with New Keynesian theory. In fact, I see it as attempt to promote New Keynesian ideas as standard economics, whereas freshwater types do the same thing by describing their models as "neoclassical".<br /><br />I think having different schools of thought is probably healthy. The problem as I see it is that both schools want to present their views as science. By any reasonable standard economics is not science, so attempts to appear more scientific result in a descent into pseudoscience. Moreover, as macroeconomic research becomes increasingly arcane and technical (in the sense that it uses ever more advanced mathematics and statistics) it becomes harder to scrutinize. The layman is forced to either accept economic research at face value or dismiss it out of hand. <br /><br />I think it would be far better if economics debates recognized that there are differences of opinion regarding how the economy operates, just as with politics people have different views about how the world works.econojonhttps://www.blogger.com/profile/11836028530972814027noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-1122446246095971472012-01-27T22:50:30.541+00:002012-01-27T22:50:30.541+00:00I have never understood the microfoundations attra...I have never understood the microfoundations attraction. The Kirman critique - that there is no reason why aggregate consumer behaviour should look like the decisions of a single optimising agent -seems to me quite devastating.mikephttps://www.blogger.com/profile/08808644741890056394noreply@blogger.com