Some comments on my earlier posts discussing
microfoundations have mentioned Mankiw’s well known paper
on the macroeconomist as scientist or engineer? This is something I’ve also
wondered about, so I went back to reread the paper. Mankiw writes:
“My premise is that the field has evolved through the efforts of two types of macroeconomist—those who understand the field as a type of engineering and those who would like it to be more of a science. Engineers are, first and foremost, problem-solvers. By contrast, the goal of scientists is to understand how the world works. The research emphasis of macroeconomists has varied over time between these two motives.”
Mankiw tries to relate this distinction to the debate
between Keynesian and New Classical economists. When I first read the paper,
and even more so now, I find this link ultimately unconvincing. The attempt to
cast Keynesians as engineers and New Classicals as scientists requires too many
qualifications: there is probably something there, but it does not seem to be
the critical distinction. His argument that New Keynesian theory has had little
influence on policy turned out to be premature, as he himself anticipated in
his conclusions.
But suppose we use the engineer/scientist dichotomy and
apply it to microfoundations, rather than particular schools of thought – will
that work? Microfoundations macro is the science, while those pursuing
different approaches are the engineers. Is the problem with academic macro at
the moment that we have too many who think they have to be scientists, and too
few who try to be engineers?
I really have not made my mind up about this. One of the
motivations I give in my earlier post listing reasons for departing from
microfoundations focuses on policy. We have some empirical finding that at
present has no clear microfoundation, but policy cannot wait for theory to
develop that microfoundation. We need to explore its macroeconomic implications
now. I give price rigidity as a retrospective example – it took at least a
decade to develop New Keynesian theories. So we can imagine those involved with
policy as the engineers, busy looking at the implications of some empirical finding,
while those exploring its microfoundations are the scientists.
Certainly I have found the distinction between scientist and
engineer often has resonance with macroeconomists in policy making
institutions. They feel the urgency of the problem, and probably have less
concern about some of the seemingly more esoteric issues that might be raised
in an academic seminar. My post suggesting that the core models used by central
banks should not be DSGE models ties in with this. In that context I like the
scientist/engineer dichotomy, because I don’t think central banks have the
resources to develop alternative modelling frameworks alone. Although we find
plenty of engineers outside academic departments, we also need engineers who
are academics.
But then, would it make sense to have distinct departments,
of pure and applied macroeconomics? Obviously not because there are not enough
of us to go round, but isn’t there something more fundamental in that
observation? I write papers that build and simulate DSGE models, but I have in
the past built models that are not fully microfounded, and the only thing
stopping me doing both at the same time is time itself and that a major part of
my job is to publish in academic journals. More importantly, in which
department would you put Michael Woodford (at least when he writes Jackson Hole
papers)?
This isn’t really about people as about ideas. I certainly
think that anyone building non-microfounded models needs to have a thorough
knowledge of microfounded models to do it well. (That would go for heterodox
economists as well.) But equally, I think it is difficult to build good
microfounded models without having a good knowledge of the empirical evidence.
This is not just a matter of selecting an appropriate puzzle: I think a good
deal of the microfoundations game is about selecting particular ‘tricks’ that
allow these models to get closer to the real world, as I suggested here.
While I can think of some macroeconomists whose productivity is largely
unrelated to what is happening in the real world, and others – particularly in
policy institutions - who do good stuff without ever seriously thinking about
microfoundations, I think the majority of academic macroeconomists need to do
both. In other words, to be good scientists we need to be engineers, and to be
good engineers we also need to be scientists.
