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:
The quote is from Olivier Blanchard in August 2008, at the beginning of the extreme instability that nearly tipped global economies into depression. His full statement is: “After the explosion (in both the positive and negative meaning of the word) …
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Nowhere does the absence of microfounded meaningful wage rigidity (MWR) do more damage than in the analysis of business cycles. The evidence from modern model-building research is conclusive. Stabilization-relevant rational-behavior macroeconomics without MWR cannot be done. Yet NK theorists continue …
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The Fed is mulling over a new approach to its zero-bound problem. A Wall Street Journal story by Nick Timiraos (“Yield Caps on Table in Next Recession”, January 27, 2020) uses historical context to describe the policy tool under consideration: …
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Last week’s post on unemployment provides context for today’s essay. In it, we return to a fundamental message of the GEM Project: The absence of microfounded meaningful wage rigidity deprives NK model-builders of crucial guidance in their attempts to be …
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Last week’s post mused about how generalized-exchange modeling, had it been available and recognized, would have fundamentally altered Robert Barro’s career. Most significantly, his work with Hershel Grossman on “fixed-wage general-equilibrium” would have been credited with insightfully microfounding Keynesian income-driven …
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In the most important contribution to the fixed-wage general-equilibrium (FWGE) literature, Robert Barro and Herschel Grossman (1971), hereafter B&G, posit nominal wage rigidity in order to investigate the interdependence of rationing in the labor and goods markets. Such analysis must …
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“Like any good [theory], it provides an explanation for something that is previously unexplainable. Just as important, it makes predictions that can be tested.” That is from Mike Brown’s review of When the Earth Had Two Moons (2019) by Eric …
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This post digs more deeply into the New Keynesian market-centric general-equilibrium model class that has occupied the macro mainstream for a generation. It begins with a contribution that ranks among the greatest in the history of economics. In it, Arrow …
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Today’s scripture is 1 Kings 17:16: “For the jar of flour was not used up and the cruse [jug] of oil did not run dry, in keeping with the word of the LORD spoken by Elijah.” The miraculous flour jar …
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The last two weeks took a critical look at an elite New Keynesian theorist’s optimistic take on the state of mainstream macroeconomics. This week provides some Early Keynesian perspective, focusing on the estimable Bob Solow’s assessment of the same topic …
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