Thoughts About the Evolution of Mainstream Macroeconomics Over the Last 40 Years (nber.org) 51
Abstract of a paper featured on NBER: This year marks the 40th anniversary of the NBER Macro Annual Conference, founded in 1986. This paper reviews the evolution of mainstream macroeconomics since then. It presents my views, informed by a survey of a number of researchers who have made important contributions to the field. I develop two main arguments.
The first is that, starting from strikingly different positions, there has been substantial convergence, in terms of methodology, architecture, and main mechanisms. Methodology: Explicit micro foundations, explicit treatment of distortions, with, at the same time, an increased willingness to deviate from rational expectations, neoclassical utility and profit maximization. Architecture: The wide acceptance of nominal rigidities as an essential distortion, although with mixed feelings. Mechanisms: The wide nature of the shocks to both the demand and the supply side.
The second is that this convergence has been, for the most part, good convergence, i.e. the creation of a generally accepted conceptual and analytical structure, a core to which additional distortions can be added, allowing for discussions and integration of new ideas and evidence, rather than fights about basic methodology. Not everything is right however, with too much emphasis on general equilibrium implications from the start, rather than, first, on partial equilibrium analysis of the phenomenon at hand.
The first is that, starting from strikingly different positions, there has been substantial convergence, in terms of methodology, architecture, and main mechanisms. Methodology: Explicit micro foundations, explicit treatment of distortions, with, at the same time, an increased willingness to deviate from rational expectations, neoclassical utility and profit maximization. Architecture: The wide acceptance of nominal rigidities as an essential distortion, although with mixed feelings. Mechanisms: The wide nature of the shocks to both the demand and the supply side.
The second is that this convergence has been, for the most part, good convergence, i.e. the creation of a generally accepted conceptual and analytical structure, a core to which additional distortions can be added, allowing for discussions and integration of new ideas and evidence, rather than fights about basic methodology. Not everything is right however, with too much emphasis on general equilibrium implications from the start, rather than, first, on partial equilibrium analysis of the phenomenon at hand.
Anyone else concerned? (Score:2)
Re: Anyone else concerned? (Score:3)
You may not be counting the initial occurrence.
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You may not be counting the initial occurrence.
You don't count the initial year in an anniversary calculation. It's their 40th year, but their 39th anniversary.
Re: Anyone else concerned? (Score:2)
Building fences is hard apparently
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Last year's conference was correctly labeled: "39th Annual Conference on Macroeconomics, 2024 [nber.org]"
Math isn't issue -- it is insight & priorities (Score:3)
As I outlined in 2008: https://www.pdfernhout.net/pos... [pdfernhout.net]
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Some comments on the PU Economics department and related research directions from a post-scarcity perspective
The PU economics department, of course, should be abolished as part of this transition. :-)
OK, that will never happen, so it should be at least "strongly admonished" for past misbehavior. :-(
What misbehavior? Essentially, the PU Economics department has taken part in a global effort to build an economic "psychofrakulator". How does a psychof
Huh (Score:2)
Is he speaking English? I think I'm going to need a translation.
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It reads like AI-generated word salad.
Try attending a quantum physicist convention (Score:2)
Do you expect to understand all their jargon? So why do you assume that economics must be understood by the average person?
Re:Try attending a quantum physicist convention (Score:4, Insightful)
Do you expect to understand all their jargon? So why do you assume that economics must be understood by the average person?
If I attend, no I don't expect to understand all their jargon.
But if one of the speakers is going to come to slashdot to self promote their paper? Then yes, I expect them to ditch their jargon and speak to the larger group.
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Exactly this. Everything relevant is in Hayek's "The Road to Serfdom"
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Ahh yes, the school of quacks who think gold is a solid currency :)
Also the school of quacks who think supply side is the only solution.
I mean, some Austrians have contributed some, but today, they are just quacks looking to fulfill their corporate masters desires. They basically are nicely paid lap dogs and serfs themselves. They wouldn't bat an eye at mass murder if the price was right and it was economically efficient, as long as it is private interests carrying out the carnage, since free market knows a
Re: Austrian economics (Score:1)
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Austrians demonstrated how to create currency Ex Nihilo. Gold standard not required, but put forth as a way "to constrain growth in" currency.
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You've got that backwards. MMT is the tool of plutocrats.
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"This paper reviews the evolution of mainstream macroeconomics since then."
They're celebrating Keynesian Economics (no matter how wrong it is, it's considered mainstream).
Austrian School NEED NOT APPLY.
It's Buzzword Bingo! (Score:2)
-sort of like 'macro economics' over the past half century.
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Mod parent Funny, but the rich target has produced no official "Funny" yet...
My own take is that Ricardo was right about "comparative advantage". That was several hundred years ago and I'm still waiting for an economist to earn a second "right" point. (time >> money)
In Plain English... (Score:3, Informative)
I asked ChatGPT to redo this really fugly summary they used here:
The Evolution of Mainstream Macroeconomics (Plain English Version) The Big Picture
This paper looks at how economists who study the entire economy (things like inflation, recessions, and unemployment) have changed their thinking over the last 40 years. The key idea: “Economists used to argue a lot about how to model the economy, but now they mostly agree on the basics — and that’s mostly a good thing.”
1. Economists Used to Disagree a Lot — Now They're More Aligned
Over time, economists have reached common ground in three main areas:
Methodology (How they build models)
Architecture (Structure of the models)
Mechanisms (What causes the economy to move)
2. Why This Agreement Is Mostly Good
But There’s a Catch
Sometimes economists try to model the whole economy at once (called "general equilibrium") when it might be smarter to just look at one part of it first ("partial equilibrium"). This can make things more complicated than necessary.
TL;DR
Over the last 40 years, economists have stopped fighting over how to model the economy and started agreeing on some key ideas. That’s helped the field grow, even if they sometimes overcomplicate things by trying to explain everything at once.
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"Include real-world imperfections like taxes, regulation, and irrational behavior."
People who believe this seem to believe these inputs do not affect the price of goods and services.
Which is obviously incorrect. These inputs are not imperfections. They are part of the equation.
Compare economics with medicine, not physics (Score:3)
Nobody accuses medicine of being a waste of time because some people are still dying. Yet people make jokes about economics because it doesn't get everything right. There's every reason to believe that the 2008 recession would have been a 1930s level depression if economics hadn't progressed a lot since the 1930s. Let's impose reasonable expectations, and not dismiss all economic insights because they don't cure the disease easily or perfectly.
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That's an unbelievably stupid assertion. The upshot is that 90% of us lost money, while the wealthy gained, as they have since Reagan.
I know, you're really a millionaire, but with a minor cash-flow issue. Or, as I prefer, a sucker.
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The upshot is that 90% of us lost money, while the wealthy gained, as they have since Reagan.
That's not great, but a Thirties-style depression would have been a lot worse.
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A hangdog Alan Greenspan was forced to admit in front of Congress and the world that the underpinnings of the philosophy he'd used to prop up the worst financial excesses was utter bunk. Economists have provided cover for a system that has consistently screwed the majority of the population for generations, and we see the results in reduced life expectancies, growing ho
Only in the USA are life expectancies down much (Score:2)
Across most of the world - especially in poorer nations - the adoption of the economic policies you so despise has led to unprecedented reductions in real poverty. The most obvious example of this is China, but India has done pretty well as well after abandoning socialist myths and allowing capitalism to flourish.
'Since 1990, more than 1 billion people have been lifted out of poverty. The decline in global extreme poverty was largely driven by robust economic growth in East Asia and Pacific and South Asia.'
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The most obvious example of this is China
Communist China? Is this some kind of elaborate joke, or are you trying to send a secret signal so a team can come rescue you?
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China is communist in name only - though it provides a convenient figleaf for the dictatorial government they presently enjoy to legitimate its tyranny. But yes, their improvement in life expectancy is spectacular
https://www.macrotrends.net/gl... [macrotrends.net]
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Better to use the word 'rationale' more often.
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The problem with (macro)economics is that it is presented as truth (aided by layering a shitload of jargon on top of what is stated), but that due to it being incredibly difficult to do rigorous economic research a lot of it is just conjecture.
Said otherwise: if economic predictions and models had to be fitted with error bars and 95% confidence intervals, they would cover almost every graph entirely. By comparison, medical research is ridiculously reliable.
Macroeconomics does not deserve the respect that it
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There's every reason to believe that the 2008 recession would have been a 1930s level depression if economics hadn't progressed a lot since the 1930s.
Fortunately USA 2008 didn't have Herbert Hoover or FDR making things worse. The rest of the world suffered a Depression in the 1930s. It was Great Depression in the US.
I'll also calling (Score:2)
Word salad on this, this is incomprehensible gibberish. Maybe that's what economics is all about.
there's no evolution, only money printing (Score:1)
Have we evolved that much? (Score:3)
Well, the last 40 years came after we dropped Keynesian economics due to its inability to explain stagflation. Now, after revisiting Keynesian economics during the plague, we find ourselves heading towards stagflation.
Have we evolved? Like, really?
Failure. (Score:2)
Well this is certainly a wordy way of saying, "Sure, we are helping fuck everything up but everyone should marvel at the efficiency of this downward spiral!"
Neoclassical Economics is a Deadend (Score:2)
MMT, heterodox and Post-Keynesians is where the serious analysis is happening and where smart money is looking to for predictive power.
Post labor economics (Score:2)
Economics or English? (Score:4, Insightful)
It appears that this post is about obfuscation of the English language.
Rejected. Please clean out your desk. (Score:3)
The MMT and Keynesian economic theorists have been miserable failures who persistently justify their failures by claiming the problems would be worse without them. Its theoretical backing for every governments desire to print and spend money to their black little hearts content.
I suppose the only good news is that it can't last forever.
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All of this discussion is just pie in the sky nonsense. The reality is that the availability of money is condensing into fewer and fewer hands. If your economic theories can assist in understanding and preventing that, then cool, if not, this is not the time for dreamy theoretical economic landscapes.
We have the minister of education talking about having a-one in the classroom for godsakes. I am uncertain if the folks in charge of the economy have a better grasp of money flows than the person in charge of e
Aha ha ha we have convinced them we arent (Score:2)