Listening to Warsh on Stabilization Policy

In my long association with the U.S. central bank, I encountered no more thoughtful, conscientious Fed Governor than Kevin Warsh. I have just reread “Rethinking Macro: Reassessing Microfoundations”, his chapter in the collection edited by Martin Baily and John Taylor … 
Read More | Comment

Taking the Pledge

Along with being sidelined by stabilization authorities in the 2007-09 Great Recession, the most embarrassing feature of today’s macro consensus is the pile of obviously important evidence that must be ignored. Most damaging, mainstream theorists have somehow agreed to sweep … 
Read More | Comment

New Keynesian Conundrum

A reason to reread Olivier Blanchard and Stanley Fischer’s Lectures in Macroeconomics (1989) is an early statement of what New Keynesians (NK) hoped to accomplish during the 30-year macro methodology war. We all know the short answer. NK economists were … 
Read More | Comment

Bob Hall’s Choice

Last week’s blog considered, from the perspective of the GEM Project, Kartik Athreya’s (2013) four rules governing what makes a model acceptable to mainstream macroeconomists. This week’s installment illustrates the troubling choices those rules impose on modern theorists.

Robert Hall, a … 
Read More | Comment

The Biggest Idea in Macroeconomics

Kartik Athreya is an economist at the Richmond Fed. He must be an interesting colleague. His recent book, Big Ideas in Macroeconomics (2013), identifies and elaborates upon four rules of engagement in modern macroeconomics. Those rules matter, defining what makes … 
Read More | Comment

Generalized Exchange Theory

This blog briefly summarizes the GEM Project. I feel good – downright cheerful – about the purpose and prospects for the endeavor. It is a pleasure to do coherent macroeconomics with powerful wage rigidities at your beck and call. Macro … 
Read More | Comment

At Last, A Modern Theory of Production

This is the third and final installment of the “At Last” blogs. Next week will very briefly summarize generalized-exchange macroeconomics, followed by an elaboration on the Project’s biggest idea. The six blogs summarizing the GEM theory constitute a small reference … 
Read More | Comment

At Last, A Modern Theory of Labor Supply

The General Theory reorients fundamental macro causation. Nominal demand disturbances inducing same-direction changes in employment implies the scrapping of Keynes’s Second Classical Postulate. Any plausible model of the 1930s depression must break the beautiful W=VMP=MRS analytic strangle-hold imposed by the … 
Read More | Comment