The GEM Project is all about the crucial need to restore meaningful wage rigidity to its Early-Keynesian centrality in macroeconomics. MWR is defined by its capacity to rationally suppress wage recontracting. EK theorists made it the keystone of their stabilization-relevant …
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Unhappy News about Knut Wicksell
Along with Philip Wicksteed, the Swedish economist Knut Wicksell (1851-1926) constructed an elegant neoclassical model of factor-income distribution that has been remarkably enduring. I have long admired Wicksell and admit to feeling sad that the GEM Project’s generalized-exchange macro model …
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Two Important Growth Models
This post is the last of the five-part series on the contribution of the GEM Project to growth macroeconomics. What follows looks at two powerful theories of trend macrodynamics that aren’t a good fit in market-centric modeling and are, as …
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Use and Abuse of the Solow Residual
Robert Solow’s neoclassical growth theory, to his surprise, provided the framework that rigorous general-market-equilibrium modeling has long used to explain trend and cyclical economic performance. This post, the fourth in a 5-part summary of the GEM Project’s contribution to growth …
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Generalizing Solow’s Growth Model
Providing the mainstream literature’s go-to explanation for trend macrodynamics is Robert Solow’s (1956, 1957) neoclassical growth theory. Along with Sir Arthur Lewis’s two-venue theory featured last week, Solow broke the problematic mechanical link between saving and growth.
Basic model. Recall last …
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Lewis Two-Sector Growth Model
This post, second in a five-part series on GEM contributions to growth theory, features Sir Arthur Lewis’s celebrated two-sector model that turns out to be a comfortable fit with the Project’s marketplace-workplace general-equilibrium macroeconomics. Once endowed with generalized-exchange microfoundations, Sir …
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Contributing to Growth Theory
The most recurring theme of the GEM Blog has two parts. First, mainstream macroeconomics, rooted in market-centric general equilibrium and therefore unable to accommodate meaningful wage rigidity, cannot be stabilization-relevant. Second, the generalization of rational exchange from the marketplace to …
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The Curse of Market-Centricity
The GEM Blog’s basic argument with mainstream macroeconomists concerns their market-centricity. The case is multidimensional but, at its core, is rooted in three facts. First, if rational-behavior macro theory cannot accommodate involuntary job loss (IJL), it cannot be stabilization-relevant. Forced …
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Thinking about Socialism
The University of Chicago’s GenForward Project recently polled Americans aged 18 to 34 and found that 49 percent hold a favorable opinion of capitalism and 45 percent favorably view socialism. Among Democrats, 61 percent have a positive opinion of socialism …
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Kenneth Arrow and What’s Important
In my considered opinion (with apologies to my MIT colleague Paul Samuelson), Ken Arrow (1921-2017) was the most accomplished economic theorist of the second half of the 20th century. I am especially impressed that he tackled only really important problems. …
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