Two Models of Stagflation, One Useful, One Not

Mainstream FGME Analysis

Mainstream friction-augmented general-market-equilibrium theory cannot  explain the massive market failure that occurred during the stagflation decade. That episode featured simultaneous high unemployment and a powerful price-wage spiral that broke apart what had been a remarkably stable interindustry wage … 
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Chicago School’s Imperialist Agenda

Generalizing price-mediated exchange from the marketplace to information-challenged workplaces is the most significant extension of the economic reach of the rational modeling of human behavior since the heyday of the marginalists more than a century ago. It interests me that … 
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The Epistemic Crisis in Macroeconomics

Epistemology is defined as the investigation of the origin, nature, methods, and limits of human knowledge. In 2018, Jonathan Rauch wrote about epistemology in the context of current events in National Affairs. “The Constitution of Knowledge” argues that societies of … 
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Fama, Shiller, and Eula Biss

A friend argues that I need to try harder to understand the how otherwise reasonable non-economists make sense out of fundamental economic concepts like capitalism, free markets, and business cycles. He recommended a recent book, Having and Being Had by … 
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Helping a Great Idea: Michael Jensen’s Residual Rent

Residual rent, particularly when used in explaining income distribution in highly specialized economies, is a great, albeit unappreciated, idea in economic theory. Consider two facts. First, useful macroeconomics require evidence-consistent modeling of factor-income shares. Second, such modeling is inconsistent with … 
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