Robert Barro and His Nobel

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 … 
Read More | Comment

Proper Theorist Behavior

“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 … 
Read More | Comment

Kalecki and 1 Kings

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 … 
Read More | Comment

Helping the Romer Brothers

 

Two decades ago, David Romer constructed the reigning New Keynesian, and therefore current mainstream, version of the Phillips curve. That contribution, which will be closely examined in a new GEM Project monograph, Resurrecting Meaningful Wage Rigidity, got me to thinking … 
Read More | Comment

What Should Happen

This is what I believe should happen. The postwar development of stabilization-relevant macroeconomics becomes divisible, like Caesar’s Gaul, into three parts. The first covers the dominance of the estimable Early Keynesians. EK theorists organized their research around the Neoclassical Synthesis, … 
Read More | Comment

Fundamental Choice

Core neoclassical principles that govern macro modeling are optimization, general equilibrium, and market centricity. The GEM Project argues that the third tenet, the restriction of rational exchange to the marketplace, long ago outlived its usefulness. The emergent ubiquity of complex, … 
Read More | Comment