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Friday, 17 June 2016

Postgrad teaching and Keynesian economics: a survey

This post is joint with André Moreira, an economist at the Bank of England

Three years ago one of us got into a discussion with Paul Krugman and Brad DeLong about how dominant, or otherwise, the New Keynesian model of business cycles was in academia. That post contained a footnote with an idea: why don’t we look at what the top schools actually teach their post graduates, to see if there are a large proportion of students who are not being taught any Keynesian economics. We came together with the idea of doing just that.

We initially thought that we could do this by ‘simply’ contacting the academics teaching core macro courses and asking them for their syllabus. You can probably guess the problem we encountered, although thanks to those who did respond. So instead we decided to survey recent students. That worked much better, with one exception we note below. (The results are written up in more detail as a short paper – see the top of the main list from this link).

We decided to ask a simple question: “Approximately what percentage of the core Macro sequence that you received covered models involving price and/or wage rigidities (including New Keynesian models)? Please round your answer to the nearest 5% mark.” We sent this question to graduate students at the top 15 schools during 2014/15 [1]. Here are the results


Table 2: Survey results

The one school missing is Chicago. Contact information for these graduates is not publicly available, and we were told by both the course administrator and the academic in charge of the course that they have a policy of not divulging the email addresses of postgraduates, even after we made it clear what we wanted them for. We also received no information from our earlier requests for a syllabus.

Of course no simple question like this is perfect: at NYU, for example, the first year teaching focuses on methods, and Keynesian analysis is covered in a later (but optional) course. We found no major discontinuities according to the year students entered the programme (a few variations are noted in the paper), and the information matched the syllabus information from those who had been good enough to respond to our first survey. We sent the results to course teachers a few months ago for any comments or corrections.

The main message we draw from these results is that, in at least the top schools, there is no major divide between a group that teaches Keynesian economics and those that do not. There is a large amount of variation among schools, but there is little evidence of the marked bifurcation among top universities that some discussions of a saltwater/freshwater divide might suggest. We suspect opinions will differ on whether the variation we still found is natural in a discipline like economics or is an indication that something is wrong.

We would be interested in any thoughts about whether it would be worth taking this analysis further in any way.


[1] Top 15 according to the IDEAS ranking of economic institutions as of September 2013.

12 comments:

  1. Glad that Oxford is reasonably high. Uniformity across all Universities NOT desirable, given the complexities and uncertainties associated with this 'science'.

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  2. If (say) 50% of macro is spent on long run growth theory, you could double those percentages to get a rough idea of the influence of sticky prices in short run macro. And there may be other components of the course where the question of whether or not prices are sticky does not arise.

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  3. A quick reaction, related to a comment of mine some time ago. In one of your earlier posts you described that the crucial difference in the NK analysis of the problem of recessions and appropriate policy is the stress on wrong real interest rates. I note that the question you asked in your survey was actually about wage/price rigidity: implying that that this is what crucially distinguishes Keynesian (New and Old) analysis.

    Almar.

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  4. Unless my knowledge of geography is even worse than I realise, the absence of Chicago in the respondents to the survey means that all of the US universities covered are are actually saltwater, i.e. close to the east or west coasts of the USA.

    Almar.

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    1. While geography might have been relevant during the rise of New Classical economics (which is when the terms were first used), I think the presumption that many would have is that by now it would be less relevant. The presumption must be that the top 15 schools are also going to be the most influential. Nevertheless one possibility might be that there is more bifurcation among the second tier of schools. The question then becomes is it of much interest to find out?

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    2. "The question then becomes is it of much interest to find out?"

      I think the Brexit debate if nothing else suggests that such elitism is almost certainly wrong. The fact there is a cosy consensus among the elite, as there was in 2007 - and still is - when there should be a lot of controversy about this methodology- should send out alarm bells. Do you think there is strong monopoly over knowledge in the profession that is stymying critique? In fact I would not say there are 15 top schools in the driving seat of this profession, there are just two. Are you basically doing what MIT and Chicago tell you? Do you lead at Oxford or do you follow? Is anybody challenging this stuff? If you do, are you on the margins?

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    3. To build on this point a little more, the absence of traditional "saltwater" strongholds (Minnesota, Rochester, Northwestern, UCLA, and of course Chicago; Penn is the only representative in this case) in the tabulation significantly skews the results. While I agree with the conditional statement that among "the top schools, the top schools, there is no major divide between a group that teaches Keynesian economics and those that do not," it is worth noting that: (a) the overall top schools are not necessarily the ones churning out the most macroeconomists (Minnesota and UCLA, in particular, comes to mind); (b) the inclusion of European univerities may also skew the results, given the greater heterogeneity in teaching on the continent (and in the UK) in general. These point to suggestions for taking the analysis forward (albeit only marginally): (1) adjust the ranking for schools producing the most macroeconomic research (which after all is what is relevant here); (2) repeat the analysis dropping European schools. If the outlier result from Penn is any indication, you may still see the divide emerge in the data yet.

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  5. The freshwater /saltwater storm in a teacup is engrossing to those involved, but the issue is not how sticky prices are but whether flexible prices (if we had them) would do anything to mitigate business cycles, recessions or unemployment or (as Keynes himself thought) make them worse.

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  6. “Approximately what percentage of the core Macro sequence that you received covered models involving price and/or wage rigidities (including New Keynesian models)? Please round your answer to the nearest 5% mark.”

    Of course, the wording of the question is misleading. A much clearer question whould be "Approximately what percentage of the core Macro sequence that you received covered New Classical models that also involve price and/or wage rigidities", with no mention of Keynes.

    The point being that price/wage rigidities are an essential feature, not a bug, of the macroeconomy. If goods prices and wages were as flexible and adjustable as financial asset prices, the degree of uncertainty and financial instability would put most economies in a permanent depression. I doubt that Keynes would recognize anything taught in the standard macro sequence in the above universities as anything resembling The General Theory.

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  7. Fascinating stuff. It would be interesting to link this data to what information you can get on syallabi, and even to think about how the situation has changed over time. Bud Collier is putting an ever-increasing number of old syallabi and reading lists on the web, though more relevant might be the collections of syllabi published by Ed Tower (Duke) which cover something like 1980-95. Not sure how comprehensive those were, but he got enough macro syllabi to fill a volume about half an inch thick.

    If Chicago won't divulge names, is it not possible to identify a recent graduate who would pass on contact details for his or her classmates?

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    1. That is very useful info. On Chicago, I was kind of hoping that maybe some Chicago grad might read the post and do exactly that.

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  8. If you could rerun this survey based only on the top 15 British institutions then you would get a result solely for Britain. In the homeland of Keynes that would be worth knowing itself in addition to the more international dimension of your first survey.

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