Wage-Rent Criticality

In generalized-exchange modeling, pure wage rent is a chronic outcome of optimizing employer-employee interaction in workplaces restricted by asymmetric information and routinized jobs. PWR is consequential, playing roles in economic phenomena including involuntary job loss, persistent cyclical unemployment, good and … 
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Bosworth and Burns

 

Going on a decade ago, Shani Schechter and I used the unique power of generalized-exchange macroeconomics to construct our extreme instability model that does a good job  explaining the 2008-09 Great Recession. It seemed to us that the biggest clue … 
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The Most Damaging Error in NK Macroeconomics

Students are typically introduced to macroeconomics via the New Keynesian (NK) 3-equation model rooted in friction-augmented general market equilibrium. This post features the version in the popular textbook, Macroeconomics, by Carlin and Soskice (C&S).  The first equation relates inflation-adjusted total … 
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This Best Paper Is Not So Good

 

The editors of the American Economic Journal: Macroeconomics (AJE:M) have selected “Deconstructing Monetary Policy Surprises – The Role of Information Shocks” by Marek Jarocinski and Peter Karadi (hereafter J&K) as the best article appearing in their journal in 2020. The … 
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The Industrial Revolution: Hard and Soft Laws

 

The GEM Blog’s month-long series on modeling of management reveals New Keynesian (NK) theorists’ badly incomplete understanding of the Industrial Revolution. The impact on the evolution of productivity-enhancing capital equipment is adequately grasped. Many also know that those technological advances … 
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