a home
for economists
who believe
macroeconomics
can be both coherent and stabilization policy-relevant
The GEM Project blog appears weekly (Fridays). Interested economists are invited to participate by submitting comments or writing blog entries.
There are a few rules. The subject matter must be related to macroeconomics and macroeconomists, especially in their grand struggle to construct models that are stabilization relevant and internally coherent. Blog entries should be 1,000 words or fewer, and author name and association are required.
These six blogs are the cliff-notes version of the GEM eBook. In bite-sized portions, they capture the essentials of Generalized Exchange Macroeconomics:
In his masterwork, Adam Smith (1776) provides two particularly deep insights about economic activity: the spontaneous organization of self-interested market exchange (the “invisible hand”) and the nature and implications of production specialization (the “pin factory”). Smith sought to explain decentralized …
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Perusing what macro theorists publish and teach reveals shockingly large gaps in what they appear to know about how modern, highly specialized economies actually work. Given that macroeconomists are generally satisfied with the state of their art, something pretty interesting …
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This post places the research of Arthur Okun, the subject of last week’s essay, in the larger context of what came to be known as efficiency-wage (EW) theory. The workplace venue of price-mediated exchange was introduced into macroeconomics by original …
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Arthur Okun’s name came up. It happened in a conversation with a friend from the high-wire policymaking days at the Fed when stagflation – simultaneously high unemployment and high inflation – was generating an instability crisis second only to the …
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This post continues my brief summary of why generalized-exchange theory should replace general-market equilibrium as the profession’s dominate macro model. This concluding instalment focuses on when and how market-centric macroeconomics became inadequate to explain mass market instability. The crucial event …
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General market equilibrium (GME), pioneered by Walras and infused with the genius of Arrow and Debreu, is a towering scholarly achievement that has long provided a valuable model of rational price-mediated exchange. Like the succession of beautiful theories in physics, …
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Involuntary job loss is at the heart of the mainstream stabilization-theory muddle. For policymakers, the socioeconomic problems of employment and income loss are central to business-cycle pathology. Many critics of modern macro modeling argue the failure of New Keynesians (NK) …
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Macroeconomic stability is a cornerstone of the modern social compact. Our capacity to under-stand, and design policies to beneficially influence, the cyclical behavior of employment, output, income, and inflation is entrusted to macroeconomists. It is a responsibility for which mainstream …
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“[T]he characteristics of great theoretical achievements are clear foundations, consistency with many observed facts, unification of theories which previously appeared as fundamentally distinct.” That high bar was set Edmond Malinvaud (1977), the late, greatly admired French macro theorist. Mainstream New …
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The term I came up with is “conundrum macroeconomics”. The heretofore nameless phenomenon refers to analysis with models that lack the capacity to accommodate, at least coherently, the existence of the activity being studied. The urge to name that curious …
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